The Value of Information Xiaohong Pang Automation Department Shanghai Jiaotong University
The Value of Information Xiaohong Pang Automation Department Shanghai Jiaotong University
Lecture Outline Introduction ■The Bullwhip Effect ■Effective Forecasts Information for the Coordination of Systems Locating Desired Products Lead time reduction Integrating the Supply Chain
Lecture Outline Introduction The Bullwhip Effect Effective Forecasts Information for the Coordination of Systems Locating Desired Products Lead time reduction Integrating the Supply Chain
The Bullwhip Effect: Managerial Insights Exists,in part,due to the retailer's need to estimate the mean and variance of demand. The increase in variability is an increasing function of the lead time. The more complicated the demand models and the forecasting techniques,the greater the increase. Centralized demand information can significantly reduce the bullwhip effect,but will not eliminate it
The Bullwhip Effect: Managerial Insights Exists, in part, due to the retailer’s need to estimate the mean and variance of demand. The increase in variability is an increasing function of the lead time. The more complicated the demand models and the forecasting techniques, the greater the increase. Centralized demand information can significantly reduce the bullwhip effect, but will not eliminate it
Conclusion The main factors contributing to the Bullwhip Effect are: ■Batching ordering ■Price fluctuation ■Inflated orders Demand forecasting ■Long lead times
Conclusion The main factors contributing to the Bullwhip Effect are: Batching ordering Price fluctuation Inflated orders Demand forecasting Long lead times
Methods for Coping with the Bullwhip Effect Reduce uncertainty POS,Sharing information Sharing forecasts and pricing policies ■Reduce variability Eliminate promotions Year-round low pricing Reduce lead times EDl,e-marketplace ■Cross docking Strategic partnerships Vendor managed inventory ■Data sharing
Methods for Coping with the Bullwhip Effect Reduce uncertainty POS, Sharing information Sharing forecasts and pricing policies Reduce variability Eliminate promotions Year-round low pricing Reduce lead times EDI, e-marketplace Cross docking Strategic partnerships Vendor managed inventory Data sharing