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Bullwhip and reverse bullwhip effects under the rationing game

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  • Ying Rong
  • Lawrence V. Snyder
  • Zuo‐Jun Max Shen

Abstract

When an unreliable supplier serves multiple retailers, the retailers may compete with each other by inflating their order quantities in order to obtain their desired allocation from the supplier, a behavior known as the rationing game. We introduce capacity information sharing and a capacity reservation mechanism in the rationing game and show that a Nash equilibrium always exists. Moreover, we provide conditions guaranteeing the existence of the reverse bullwhip effect upstream, a consequence of the disruption caused by the supplier. In contrast, we also provide conditions under which the bullwhip effect does not exist. In addition, we show that a smaller unit reservation payment leads to more bullwhip and reverse bullwhip effects, while a large unit underage cost results in a more severe bullwhip effect. © 2017 Wiley Periodicals, Inc. Naval Research Logistics 64: 203–216, 2017

Suggested Citation

  • Ying Rong & Lawrence V. Snyder & Zuo‐Jun Max Shen, 2017. "Bullwhip and reverse bullwhip effects under the rationing game," Naval Research Logistics (NRL), John Wiley & Sons, vol. 64(3), pages 203-216, April.
    • Handle: RePEc:wly:navres:v:64:y:2017:i:3:p:203-216
    DOI: 10.1002/nav.21745
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    Cited by:

    1. Victor Amelkin & Rakesh Vohra, 2019. "Strategic Formation and Reliability of Supply Chain Networks," Papers 1909.08021, arXiv.org, revised Jan 2020.
    2. Victor Amelkin & Rakesh Vohra, 2019. "Yield Uncertainty and Strategic Formation of Supply Chain Networks," Papers 1907.09943, arXiv.org.
    3. Dass, Mayukh & Reshadi, Mehrnoosh & Li, Yuewu, 2023. "An exploration of ripple effects of advertising among major suppliers in a supply chain network," Journal of Business Research, Elsevier, vol. 169(C).

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