Centralized versus decentralized inventory control in supply chains and the bullwhip effect

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CEPIE Working Paper ; No. 17/17

Classification and Topics

• Classification: Wirtschaft ; Firm Organization and Market Structure ; Transactional Relationships; Contracts and Reputation; Networks ; Production Management
• Subject: bullwhip effect ; production smoothing ; inventory ; supply chain ; volatility ; stockout avoidance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Qu, Zhan ; Raff, Horst
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Center of Public and International Economics (CEPIE)
• (where): Dresden
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/170529
• URN: urn:nbn:de:bsz:14-qucosa-229867
• Last update: 10.03.2025, 11:41 AM CET