Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170529
Authors: 
Qu, Zhan
Raff, Horst
Year of Publication: 
2017
Series/Report no.: 
CEPIE Working Paper 17/17
Abstract: 
This paper constructs a model of a supply chain to examine how demand volatility is passed upstream through the chain. In particular, we seek to determine how likely it is that the chain experiences a bullwhip effect, where the variance of the upstream firm's production exceeds the variance of the downstream firm's sales. We show that the bullwhip effect is more likely to occur and is greater in size in supply chains in which inventory control is centralized rather than decentralized, that is, exercised by the downstream firm.
Subjects: 
bullwhip effect
production smoothing
inventory
supply chain
volatility
stockout avoidance
JEL: 
L22
L14
D92
M11
Document Type: 
Working Paper

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