Bullwhip effect in pricing under different supply chain game structures

Adnan, Ziaul Haq; Özelkan, Ertunga C.

doi:10.1057/s41272-019-00203-8

Cited by 7 publications

(5 citation statements)

References 33 publications

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“…The presence and the high level of stocks across supply chains are an important source of delays and oscillation on prices from consumers to farmers (Lee et al, 1997;Adnan and Özelkan, 2019). In Brazil, there are no government-held stocks of milk and dairy products, and current stocks held by major dairy companies are considered operating stocks only to meet short-term demand (USDA-FAS, 2018).…”

Section: Discussionmentioning

confidence: 99%

Components of farm milk price behavior in Brazil from 2005 to 2020

Simões¹,

Nicholson²,

Carvalho³

2023

Revista Brasileira De Zootecnia

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The objective of this study was to assess behavior patterns in Brazilian farm milk prices. We employed a structural time series techniques model, the Unobserved Component Model (UCM), which is part of the family of State Space models, to assess the trend, seasonality, cyclical behavior, and impacts of exogenous regressors on aggregated farm milk price behavior in Brazil from January 2005 to December 2019. We tested five alternative models with different regressors using the monthly national average prices of milk paid to farmers. The fit of the models was assessed with Akaike information criterion and Bayesian information criterion. Predictions were assessed by the root mean squared error (RMSE), mean absolute error (MAE), and mean absolute percentage error (MAPE). All models demonstrated a high degree of accuracy. Trends, seasonality, and two cycles were statistically significant, with the trend and long-period cycle contributing the most to price variation. Exogenous factors such as feed cost and international dairy product prices also had significant positive effects on the level of Brazil's farm milk prices. All models demonstrated a high degree of accuracy, which may indicate their usefulness for price forecasting and policy formulation.

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Section: Discussionmentioning

confidence: 99%

Components of farm milk price behavior in Brazil from 2005 to 2020

Simões¹,

Nicholson²,

Carvalho³

2023

Revista Brasileira De Zootecnia

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“…The problem of demand negativity is different in nature than the bullwhip effect which describes how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor and manufacturer levels. This effect with regard to supply chain contracts have recently been studied in [ 1 , 2 , 48 , 49 ].…”

Section: General Problem Statementmentioning

confidence: 99%

Returns handling in e-commerce: How to avoid demand negativity in supply chain contracts with returns?

Bieniek

2023

Electron Commer Res

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E-commerce constitutes a system for the online purchase and sale of services and commodities. This theoretical article investigates the manufacturer handling strategy which occurs in online shopping, in a centralized or decentralized channel under the wholesale price contract. The retailer’s optimal order quantity, price, and the manufacturer’s wholesale price are derived assuming additive uncertainty in demand. The possibility of negative demand realizations, which may occur in adverse market circumstances, is verified in the investigated models. It was proved that the imposition of the non-negativity prerequisite on demand is vital to obtain complete results. The non-negativity constraint in this study incorporates consumer’s returns handling costs which is different than the previously used constraint. As an extension of the additive case, the model with iso-elastic demand is discussed. The theoretical analysis is enriched with numerical examples.

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“…Adnan and Ozelkan [41] investigate the behaviour of the bullwhip effect with respect to the price adjustment speed and historical price discount sensitivity. Their results show that controlling price discount sensitivity is useful for supply chain companies.…”

Section: Bullwhip Effectmentioning

confidence: 99%

“…Therefore, it is clear that   With substituting formula (39), formula (41), formula (43) and formula (44) in formula (F.2), we have formula (F.3) as follow: With substituting formula (46) in formula (G.1), we have According to formula (13), formula (22), formula (32), formula (39) and formula (41), we have formula (J.2) and formula (J.3). As a result, according to the formula (31) and formula (J.6), we obtain formula (J.7).…”

Section: Appendix 2: Proof Of Propositionmentioning

confidence: 99%

The analysis of bullwhip effect in supply chain based on hedging strategy compared with optimal order quantity strategy

et al. 2021

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The bullwhip effect is one of the most important problems in the supply chain management. It can cause large inefficiency in supply chain. Although there are many researches about bullwhip effect, few studies have investigated this phenomenon caused by product price fluctuation. In this paper we consider a two-period supply chain consisting of one supplier, one wholesaler and one retailer. The wholesale price may increase greatly in the beginning of second period. If this happens, a large number of end customers will go to purchase the product from retailer. For managing the end customers' demands in the second period, we consider two ordering strategies available to the retailer including optimal order quantity strategy and hedging strategy with call option. For each strategy, we calculate the bullwhip effect ratio for two periods and compare the results. We found that the lower exercise price in hedging strategy compared with the wholesale price in the optimal order quantity strategy must not contribute to extra product purchase. The research provides new insights into how hedging strategy can reduce bullwhip effect.

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Bullwhip effect in pricing under different supply chain game structures

Cited by 7 publications

References 33 publications

Components of farm milk price behavior in Brazil from 2005 to 2020

Components of farm milk price behavior in Brazil from 2005 to 2020

Returns handling in e-commerce: How to avoid demand negativity in supply chain contracts with returns?

The analysis of bullwhip effect in supply chain based on hedging strategy compared with optimal order quantity strategy

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