Consider a supply chain where a manufacturer sells to a distributor who sells to a wholesaler who sells to a retailer.

Bullwhip Effect:

Consider a supply chain where a manufacturer sells to a distributor who sells to a wholesaler who sells to a retailer. Last year, the retailer's weekly variance of demand was 4000 units. The weekly variance of orders was 5000; 8000; 12,000; and 17,000 units for the retailer, wholesaler, distributor, and manufacturer, respectively. (Note that the variance of orders equals the variance of demand for that firm's supplier.)

(a) Calculate the bullwhip measure for the retailer.

(b) Calculate the bullwhip measure for the wholesaler.

(d) Calculate the bullwhip measure for the manufacturer.

Solutions

Expert Solution

(a) Bullwhip measure for the retailer = Variance of orders / Variance of demand

= 5000/4000

= 1.25

(b) Bullwhip measure for the wholesaler = Variance of orders / Variance of demand

= 8000/5000

= 1.6

= 12000/5000

= 2.4

= 17000/12000

= 1.417

keosha answered 1 year ago

Next > < Previous

Related Solutions

Consider the supply chain illustrated below: manufacturer->distributor->wholesaler->retailer. Last year the retailer's weekly variance of demand was...

Consider the supply chain illustrated below: manufacturer->distributor->wholesaler->retailer. Last year the retailer's weekly variance of demand was 210 units. The variance of orders was 480, 590, 770, and 1,320 units, for the retailer, wholesaler, distributor, and manufacturer, respectively. (Note that the variance of orders equals the variance of demand for that firm's supplier.) A) The bullwhip measure for the retailer is B) The bullwhip measure for the wholesaler is C) The bullwhip measure for the distributor is D) The bullwhip measure...

Consider a supply chain consisting of a part supplier, a manufacturer (mfr.), the retailer, and the...

Consider a supply chain consisting of a part supplier, a manufacturer (mfr.), the retailer, and the customer. Suppose the customer’s reservation price of the machine is $200. The retail price is $150. The wholesale price between the mfr. and the dealer is $100. The dealer’s other retail-related cost is $20. The mfr. produces the product at $30 as the production cost and pays the supplier $20 to buy the parts needed. The supplier’s production cost is $10. Q1. Please calculate...

Consider a simple supply chain consisting of a manufacturer, a distributor and retailers. Which member of...

Consider a simple supply chain consisting of a manufacturer, a distributor and retailers. Which member of the suply chain faces the highest level of fluctuating demand? Discuss the effective means for reducing the level of demand fluctuation.

Provide a real-world example of a wholesaler, a distributor, and a retailer. Discuss the differences among...

Provide a real-world example of a wholesaler, a distributor, and a retailer. Discuss the differences among them.

1. Consider a wholesaler and a retailer selling designer handbags. Each has market power. The wholesaler...

1. Consider a wholesaler and a retailer selling designer handbags. Each has market power. The wholesaler sells designer handbags to the retailer, which then sells the handbags to consumers. The demand for handbags is captured by P = 24-Q. Assume that the marginal cost of producing a handbag is constant (MC=$8). Consider the following scenarios: a. Suppose that the retailer is the only firm and that it can produce the handbags it sells (there is no wholesaler here). How many...

1. Consider a wholesaler and a retailer selling designer handbags. Each has market power. The wholesaler...

1. Consider a wholesaler and a retailer selling designer handbags. Each has market power. The wholesaler sells designer hadbags to the retailer, which then sells the handbags to consumers. The demand for handbags is captured by P = 24-Q. Assume that the marginal cost of producing a handbag is constant (MC=$8). Consider the following scenarios: a) Suppose that the retailer is the only firm and that it can produce the handbags it sells (there is no wholesaler here). How many...

Let's assume that the retailer buys the T-shirt from a wholesaler and sells it for $40.00....

Let's assume that the retailer buys the T-shirt from a wholesaler and sells it for $40.00. If the retailer wishes to make a 20% margin on price, what the maximum cost the retailer is prepared to pay?

Write the advantages and disadvantages for all types? a) Manufacturer b) Wholesaler c) Retailer d) Hybrid...

Write the advantages and disadvantages for all types? a) Manufacturer b) Wholesaler c) Retailer d) Hybrid e) Service – capital intensive f) Service – labor intensive

A retailer forms long-term supply relationships with several of its key manufactures who supply it with...

A retailer forms long-term supply relationships with several of its key manufactures who supply it with product to sell in its store. Part of the long-term agreement involves setting prices instead of on a transaction-by-transaction basis. Has a supply-side gap been closed here? What flow or flows have been involved in this change? Are there instances where this can increase (rather than decrease) the cost of running the channel? *Please answer all three questions as detailed as possibled

There is a two-stage make-to-order (MTO) supply chain that involves a bakery product retailer in Holland...

There is a two-stage make-to-order (MTO) supply chain that involves a bakery product retailer in Holland and a Hong Kong mooncake manufacturer. The retailer purchases locally made mooncakes from the Hong Kong manufacturer at the cost of $180 per box and sells the mooncakes to customers at the price of $300 per box during the festival. The manufacturer has set the purchase lot size as 500 boxes. The retailer can sell all unsold mooncakes to a discount store at $40...

Subjects