Implication of information sharing on Bullwhip effects in a toy supply chain

Coordination of toy supply chains is challenged by volatile and seasonal demand with high forecast errors and bullwhip effects. This paper compares Bullwhip effects in a three-level divergent a toy supply chain between retailers who shared downstream demand information (consumer sales) and retailers who did not share. Bullwhip effect is reduced when the shared volume of retailers who shared downstream demand information increased; however, fill rate performance is not improved. Key causes of Bullwhip effect are identified - forecast updating, timeliness of demand signal, limited use of shared demand information, and replenish coordination. Two approaches to explore the use of shared information are tested. A simple forecast adjustment procedure is proven effective in improving annual forecast and reducing Bullwhip effect three months after product launch. A proposed coordination algorithm using early order commitment has decreased the Bullwhip effect for all supply chain members even if it is applied locally.