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Centralized versus Decentralized Inventory Control in Supply Chains and the Bullwhip Effect

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.

Identiferoai:union.ndltd.org:DRESDEN/oai:qucosa.de:bsz:14-qucosa-229867
Date20 October 2017
CreatorsQu, Zhan, Raff, Horst
ContributorsTechnische Universität Dresden, Fakultät Wirtschaftswissenschaften
PublisherSaechsische Landesbibliothek- Staats- und Universitaetsbibliothek Dresden
Source SetsHochschulschriftenserver (HSSS) der SLUB Dresden
LanguageEnglish
Detected LanguageEnglish
Typedoc-type:workingPaper
Formatapplication/pdf
Relationdcterms:isPartOf:CEPIE Working Paper ; 17/17

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