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Bullwhip Effect and Lot Size: the Main Cause of BwE is Lot Size  

Paik, Si-Hyun (YanBian University of Science &Technology, MIS)
Publication Information
IE interfaces / v.21, no.2, 2008 , pp. 161-169 More about this Journal
Abstract
Normally, suppliers have to decide on what, how much, and when to replenish stocks of goods based on a data flow generated by a vendor managed inventory(VMI) system. But information from supply chain is often misleading. It is common for such data to be distorted by a lack of coordination and synchronization across several business entities managing different supply chain operations. This phenomenon is called the 'bullwhip effect(BwE)'. Many researchers, working over many years, have studied the reasons for the BwE. They have proposed various remedies, but this phenomenon persists. Though overlooked in previous research, this paper reveals that the 'lot size' of a supply chain of distribution is indeed the main cause of the BwE. In addition, some problems in the existing methods of measuring the BwE are identified and a revised much improved method of measurement is suggested.
Keywords
bullwhip effect; retailer; supply chain;
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