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Learning, communication, and the bullwhip effect
Author(s) -
Wu Diana Yan,
Katok Elena
Publication year - 2006
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2005.08.006
Subject(s) - bullwhip effect , supply chain , experiential learning , bounded rationality , order (exchange) , supply chain management , knowledge management , computer science , business , marketing , psychology , artificial intelligence , mathematics education , finance
We investigate the effect of learning and communication on the bullwhip effect in supply chains. Using the beer distribution game in a controlled laboratory setting, we test four behavioral hypotheses – bounded rationality, experiential learning, systems learning, and organizational learning – by systematically manipulating training and communication protocols. We find that order variability decreases significantly in a setting in which participants start with hands‐on experience, and are then allowed to formulate team strategies collaboratively. This result indicates that while training may improve individuals’ knowledge and understanding of the system, it does not improve supply chain performance unless supply chain partners are allowed to communicate and share this knowledge. Our results indicate that the bullwhip effect is, at least in part, caused by insufficient coordination between supply chain partners.