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The Value of Information: Chap 04 王仁宏 助理教授
The Value of Information: Chap 04 王仁宏 助理教授
Chap 04
王仁宏 助理教授
國立中正大學企業管理學系
©Copyright 2001 製商整合科技中心
Lecture Outline
Reading:
1. Barilla SpA, Harvard Business School, 9-694-046
Barilla SpA Part A
Figure 1. Order
Stream
Figure 2. Point-of-sales
Data-Original
• Demand Forecast
• Long lead times
• Order Batching
• Price fluctuation (Promotional sales)
• Inflated orders
- IBM Aptiva orders increased by 2-3 times when
retailers thought that IBM would be out of stock
over Christmas
- Same with Motorola’s Cellular phones
What are the Causes….
• Single retailer, single manufacturer.
– Retailer observes customer demand, Dt.
– Retailer orders qt from manufacturer.
– Lead time = L.
Dt qt
Retailer Manufacturer
L
The Bullwhip Effect
2
Var (Q ) 2L 2L
1 2
Var ( D) P P
Var(q)/Var(D):
For Various Lead Times
14
L=5
12
10
8 L=3
6
4 L=1
L=1
2
0
0 5 10 15 20 25 30
Multi-Stage Supply Chains
Consider a multi-stage supply chain:
– Stage i places order qi to stage i+1.
– Li is lead time between stage i and i+1.
k 1 k 1
K 2( Li ) 2( Li ) 2
Var (Q )
1 i 1
i 1
2
Var ( D ) p p
K
Var (Q ) k 1
2 Li 2 Li 2
1 2
Var ( D ) i 1 p p
Multi-Stage Systems:Var(qk)/V
ar(D)
30
25 Dec, k=5
20
15
Cen, k=5
10 Dec, k=3
Cen, k=3
5 k=1
0
0 5 10 15 20 25
The Bullwhip Effect:
Managerial Insights
• Exists, in part, due to the retailer’s need to
estimate the mean and variance of demand.
• The increase in variability is an increasing
function of the lead time.
• The more complicated the demand models and
the forecasting techniques, the greater the
increase.
• Centralized demand information can reduce the
bullwhip effect, but will not eliminate it.
Coping with the Bullwhip Effect
• Reduce Uncertainty
- POS
- Sharing Information
- Centralizing demand information
• Reduce Variability
– Year round or Everyday low pricing
• Reduce Lead Times
- Information lead times: EDI
- Order lead times: Cross Docking
• Alliance Arrangements
– Vendor managed inventory
Supply Chain Management:
Pitfalls and Opportunities
Conflicting Objectives in the Supply Chain
1. Purchasing
• Stable volume requirements
• Flexible delivery time
• little variation in mix
• large quantities
2. Manufacturing
• Long run production
• High quality
• High productivity
• Low production cost
Supply Chain Management:
Pitfalls and Opportunities
3. Warehousing
• Low inventory
• Reduced transportation costs
• Quick replenishment capability
4. Customers
• Short order lead time
• High in stock
• Enormous variety of products
• Low prices
Supply Chain Integration -
Dealing with Conflicting Goals
• Lot Size vs. Inventory
• Inventory vs. Transportation
• Lead Time vs. Transportation Cost
• Product Variety vs. Inventory
• Cost vs. Customer Service
Symptoms of Supply Chain
Problems
• Stock-outs and High Inventory
• Long Cycle Times
• High Returns
• High Costs
• Poor Service Level
Common Pitfalls