Exploring the bullwhip effect by means of spreadsheet simulation.

An important supply chain research problem is the bullwhip effect: demand fluctuations increase as one moves up the supply chain from retailer to manufacturer. It has been recognized that demand forecasting and ordering policies are two of the key causes of the bullwhip effect. In this paper we present a spreadsheet application, which explores a series of replenishment policies and forecasting techniques under different demand patterns. It illustrates how tuning the parameters of the replenishment policy induces or reduces the bullwhip effect. Moreover, we demonstrate how bullwhip reduction (order variability dampening) may have an adverse impact on inventory holdings. Indeed, order smoothing may increase inventory fluctuations resulting in poorer customer service. As such, the spreadsheets can be used as an educational tool to gain a clear insight into the use or abuse of inventory control policies and improper forecasting in relation to the bullwhip effect and customer service. Keywords: Bullwhip effect, forecasting techniques, replenishment rules, inventory fluctuations, spreadsheet simulationBullwhip; Bullwhip effect; Forecasting techniques; Inventory fluctuations; Replenishment rule; Simulation; Spreadsheet simulation;

Exploring the bullwhip effect by means of spreadsheet simulation.

One of the main supply chain deficiencies is the bullwhip effect: demand fluctuations increase as one moves up the supply chain from retailer to manufacturer. The Beer Distribution Game is widely known for illustrating these supply chain dynamics in class. In this paper we present a spreadsheet application, exploring the two key causes of the bullwhip effect: demand forecasting and the type of ordering policy. We restrict our attention to a single product two-echelon system and illustrate how tuning the parameters of the replenishment policy induces or reduces the bullwhip effect. We also demonstrate how bullwhip reduction (dampening the order variability) may have an adverse impact on inventory holdings and/or customer service. As such, the spreadsheets can be used as an educational tool to gain a clear insight into the use of inventory control policies and forecasting in relation to the bullwhip effect and customer service.Bullwhip effect; Replenishment rules; Forecasting techniques; Spreadsheet simulation; Beer distribution game;

A real options approach to project management.

When scheduling an uncertain project, project management may wait for additional (future) information to serve as the basis for rescheduling the project. This flexibility enhances the project's value by improving its upside potential while limiting downside losses relative to the initial expectations. Using traditional techniques such as net present value or decision tree analysis may lead to false results. Instead, a real options analysis should be used. We discuss the potentials of a real options approach to project scheduling with an example and highlight future research directions.Decision; Flexibility; Information; Management; Net present value; Options; Project management; Project scheduling; Real options; Scheduling; Uncertainty; Value;

Did inventories decrease in the Belgian manufacturing sector between 1979 and 2000?.

It is almost unquestionably accepted by most observers that inventories decreased over time. There are so many Enterprise Resource Planning systems implemented and so many Just-In-Time ideas successfully introduced in companies that we almost automatically conclude that inventories went down. This conclusion, however, is somewhat hasty. Finished product inventories did actually not decrease, whereas the work-in-process and raw materials inventories did go down in most industrial sectors. This is the main conclusion from our econometric study performed on industry data (15 industrial sectors) during the period 1979-2000. In this paper we focus on the econometric model of our study, we interpret the results and we conclude with a number of managerial insights.Companies; Data; Empirical study; Industry; Inventory; Just in time; Manufacturing; Model; Planning; Product; Studies; Systems; Time; Time series;

Did just-in-time management effectively decrease inventory ratios in Belgium?.

Belgium; Inventory; Just in time; Management; Ratios;