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Measuring endogenous supply chain volatility: Beyond the bullwhip effect

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  • Kim, Ilhyung
  • Springer, Mark

Abstract

Most recent research on supply chain volatility has focused on one particular dimension of that volatility, namely the amplification of upstream order variability. While not ignoring this aspect of supply chain volatility, we focus on a different but equally critical aspect of volatility: the cyclical oscillation of on-hand and on-order inventories about their target values. We prove that such cyclicality does not require oscillatory or random retailer demand as a prerequisite; the resulting volatility is therefore endogenous rather than simply an amplification of exogenous demand inputs. We also measure the amount of amplification resulting from a step increase in demand. The order amplification is the product of two factors, each of which is clearly linked to either on-hand or on-order inventory. Our results attest that supply chain volatility can arise in the absence of exogenous oscillatory or random demand and suggest strategies for avoiding or minimizing such volatility.

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  • Kim, Ilhyung & Springer, Mark, 2008. "Measuring endogenous supply chain volatility: Beyond the bullwhip effect," European Journal of Operational Research, Elsevier, vol. 189(1), pages 172-193, August.
    • Handle: RePEc:eee:ejores:v:189:y:2008:i:1:p:172-193
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    References listed on IDEAS

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    1. Dejian Yu & Zhaoping Yan, 2021. "Knowledge diffusion of supply chain bullwhip effect: main path analysis and science mapping analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(10), pages 8491-8515, October.
    2. Ciancimino, Elena & Cannella, Salvatore & Bruccoleri, Manfredi & Framinan, Jose M., 2012. "On the Bullwhip Avoidance Phase: The Synchronised Supply Chain," European Journal of Operational Research, Elsevier, vol. 221(1), pages 49-63.
    3. Benjamin Nitsche, 2018. "Unravelling the Complexity of Supply Chain Volatility Management," Logistics, MDPI, vol. 2(3), pages 1-26, August.
    4. Chatfield, Dean C. & Pritchard, Alan M., 2013. "Returns and the bullwhip effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 49(1), pages 159-175.
    5. Lin, Junyi & Huang, Hongfu & Li, Shanshan & Naim, Mohamed M., 2023. "On the dynamics of order pipeline inventory in a nonlinear order-up-to system," International Journal of Production Economics, Elsevier, vol. 266(C).
    6. Springer, Mark & Kim, Ilhyung, 2010. "Managing the order pipeline to reduce supply chain volatility," European Journal of Operational Research, Elsevier, vol. 203(2), pages 380-392, June.
    7. Armenia, Stefano & Franco, Eduardo & Iandolo, Francesca & Maielli, Giuliano & Vito, Pietro, 2024. "Zooming in and out the landscape: Artificial intelligence and system dynamics in business and management," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    8. Ciancimino, Elena & Cannella, Salvatore & Canca Ortiz, José David & Framiñán Torres, José Manuel, 2009. "Análisis multinivel de cadenas de suministros: dos técnicas de resolución del efecto bullwhip // Supply Chain Multi-level Analysis: Two Bullwhip Dampening Approaches," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 8(1), pages 7-28, December.
    9. Yu, Dejian & Yan, Zhaoping, 2023. "Main path analysis considering citation structure and content: Case studies in different domains," Journal of Informetrics, Elsevier, vol. 17(1).

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