Revision of the Bullwhip Effect

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Author(s): David de la Fuente (Oviedo University, Spain)
Copyright: 2008
Pages: 7
Source title: Encyclopedia of Networked and Virtual Organizations
Source Author(s)/Editor(s): Goran D. Putnik (University of Minho, Portugal)and Maria Manuela Cruz-Cunha (Polytechnic Institute of Cavado and Ave, Portugal)
DOI: 10.4018/978-1-59904-885-7.ch181

Keywords: Information Science Reference / Media & Communications / Social Computing / Virtual Communities & Virtual Reality

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Abstract

A supply chain is composed of all the stakeholders and processes involved in satisfying consumer demand: wholesaler, retailer, warehousing, transport and so on. A classic method to understand the internal workings of a supply chain is the much-used beer distribution game that came out of MIT during the sixties. In this game, each player takes on the role of one of the members of the chain (consumer, retailer, wholesaler and manufacturer). The aim is for each of them to coordinate their actions in such a way as to satisfy the demands of the upstream member of the chain at the least possible cost. Sterman (1989) provided evidence of an effect that had already been described by Forrester (1961) whereby initial consumer demand is distorted and amplified as it passes along the chain. This increment is known as the Forrester or Bullwhip effect.

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