Production and Operations Management · 2004 · 390 citations · 28 references
Digital MarketingInventory TheorySupply Chain RiskInformation SharingInformation OverloadInformation QualityOperations ResearchInventory ManagementInventory ControlSupply Chain DisruptionManagementLogisticsSupply ChainQuantitative ManagementInformation AsymmetrySupply Chain ManagementInformation ManagementMarketingSupply ManagementVariance AmplificationBusinessBullwhip Effect—impactSupply Chain Analysis
The study uses the SISCO simulation model to investigate how stochastic lead times and information sharing/quality affect supply‑chain performance in a periodic order‑up‑to inventory system. The simulation, validated against Chen et al. and Dejonckheere et al., incorporates realistic assumptions derived from interviews with large‑chain managers. Lead‑time variability amplifies supply‑chain variance, but information sharing and quality significantly reduce this amplification, cutting variance by about 50% at the factory level.
We use a simulation model called ‘SISCO’ to examine the effects in supply chains of stochastic lead times and of information sharing and quality of that information in a periodic order‐up‐to level inventory system. We test the accuracy of the simulation by verifying the results in Chen et al. (2000a) and Dejonckheere et al. (2004). We find that lead‐time variability exacerbates variance amplification in a supply chain, and that information sharing and information quality are highly significant. For example, using the assumptions in Chen et al. (2000a) and Dejonckheere et al. (2004), we find in a numerical experiment of a customer‐retailer‐wholesaler‐distributor‐factory supply chain that variance amplification is attenuated by nearly 50 percent at the factory due to information sharing. Other assumptions we make are based on interviews or conversations with managers at large supply chains.
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