System-Wide Training and Coordination, the
Impact of Learning on the
Bullwhip Effect: An Experimental Study
Diana Wu and Elena Katok
We
investigate the effect of several communication and training protocols on ordering
decisions in multi-echelon serial supply chains. Specifically, we investigate
the extent to which system-wide training and communication help mitigate the “Bullwhip
Effect”, the observation that the variability of orders in supply chains
increases as one moves closer to the source of production. We find that in the
laboratory allowing participants to discuss team strategy prior to the
beginning of the game alleviates the bullwhip behavior. System-wide training also helps to reduce the
bullwhip effect, when combined with the opportunity to communicate. Combining
system-wide training and communication reduces order variability and
amplification, thus producing the most stable system. Our findings offer new insights into the
bullwhip phenomenon and have practical implications for managing supply chains
as well other dynamic decision- tasks involving delays and multiple
participants.