Lean Supply Chain Management Essentials

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Appendix 2: e Bullwhip Effect

e phenomenon of volume variation amplification is very common in most material

management systems and is commonly called bullwhipping the supply chain. One of

the most commonly used inventory strategies, namely, keeping an inventory of a cer-

tain number of days or weeks of demand in stock, is one of the most blatant contribu-

tors of bullwhipping the supply chain. Let’s take a minute to explore how this occurs.

We start the picture with the inventory of the finished goods, using an inventory

policy of two weeks of future demand as the inventory level and a starting inventory

of two weeks, namely, two hundred pieces (Table A2.1).

We have a small spike of demand in weeks 3, 4, and 5, but overall this doesn’t look ...