FI 393 Lecture Notes - Lecture 52: Consumer Behaviour, Stockout, Reverse Logistics
Document Summary
What are the four major causes of the bullwhip effect: demand forecast updating, order batching, price fluctuations, rationing and shortage gaming. What is demand forecast updating? forecasts readjustments made at each supply chain (demand signal processing) contribute to the bullwhip effect. What is order batching? companies batch or accumulate demands before issuing an order. This would amplify variability and regular surges in demand. Special promotions (price discounts, quantity discounts, coupons, rebates, etc. ) and trade deals (e. g. , special discounts, price terms, and payment terms) create "forward buying". As a result, the customer"s buying pattern does not reflect its consumption pattern, and the variation of the buying quantities is much bigger than the variation of the consumption rate. What is rationing and shortage gaming? result when demand exceeds supply and products are rationed to members of the supply chain and when overreacting customers anticipating shortage give the supplier inaccurate information on the real demand.
