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Reverse bullwhip effect in pricing

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  • Özelkan, Ertunga C.
  • ÇakanyIldIrIm, Metin
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    Abstract

    Price variability is one of the major causes of the bullwhip effect. This paper analyzes the impact of procurement price variability in the upstream of a supply chain on the downstream retail prices. Procurement prices may fluctuate over time, for example, when the supply chain players deploy auction type procurement mechanisms, or if the prices are dictated in market exchanges. A game theory framework is used here to model a serial supply chain. Sequential price game scenarios are investigated to show that there is an increase in retail price variability and an amplified reverse bullwhip effect on prices (RBP) under certain demand conditions.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 192 (2009)
    Issue (Month): 1 (January)
    Pages: 302-312

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    Handle: RePEc:eee:ejores:v:192:y:2009:i:1:p:302-312

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    Web page: http://www.elsevier.com/locate/eor

    Related research

    Keywords: Pricing Bullwhip effect Supply chain management Game theory;

    References

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    Cited by:
    1. Zhang, Xiaolong & Burke, Gerard J., 2011. "Analysis of compound bullwhip effect causes," European Journal of Operational Research, Elsevier, vol. 210(3), pages 514-526, May.

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