Information distortion in a supply chain: the bullwhip effect
Management Science - Special issue on frontier research in manufacturing and logistics
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In a dynamic environment such as a supply chain, even basic supplier-customer systems with structurally simple information and material flow formations have a tendency to exhibit operational complexity. The operational complexity of supplier-customer systems is associated with the uncertainty of information and material flows within and across organizations. Operational complexity or dynamic complexity can be variable with the ad hoc order, unreliable deliveries, demand fluctuations, alterations to specifications, effectiveness of the management and other unpredicted variations in information and material variation in supply chain. A few works have been accomplished to measured and defined operational complexity of supply chain. But there is not any convincing proof about the transfer mechanism of operational complexity from one tier/echelon to another tier/echelon. The focus of this research and the purpose of it, is to indicate how operational complexity transfer across supply chain by demand amplification or Bullwhip effect.