The implications of information sharing on bullwhip effects in a toy supply chain

This paper compares actual bullwhip effects provided by retailers who shared downstream demand information and retailers who did not share in a three-level (divergent) toy supply chain. The toy supply chain faces high forecast errors and bullwhip effects due to unpredictable and seasonal demand patterns. The results indicate a reduction of the bullwhip effect and an improvement of the fill rate due to the increase of retailers who shared downstream demand information. This paper also addresses two main causes of the bullwhip effect, which are the supply variability and limited use of the shared demand information. To reduce the bullwhip effect, two solutions using the shared information are tested. They are a proposed premature replenishment rule and a simple forecast updating mechanism. Both solutions are proven capable in reducing bullwhip effects of the toy supply chain even without coordination between the toy manufacturer and the retailers.