Consider a three-firm supply chain consisting of a retailer, manufacturer, and supplier. The retailer's demand over an 8-week period was 90 units each of the first 2 weeks, 220 units each of the second 2 weeks, 310 units each of the third 2 weeks, and 420 units each of the fourth 2 weeks. The following table presents the orders placed by each firm in the supply chain. Notice, as is often the case in supply chains due to economies of scale, that total units are the same in each case, but firms further up the supply chain (away from the retailer) place larger, less frequent, orders.
WEEK RETAILER MANUFACTURER SUPPLIER
1 90 180 620
3 220 440
4 220
5 310 620 1460
6 310
7 420 840
8 420
Recall that the sample variance of a data set can be found by using the VAR.S function in Excel or by plugging each x value of the data set into the formula: Variance =g(x - x)2(n - 1), where x is the mean of the data set and n is the number of values in the set.
a) What is the bullwhip measure for the retailer?
b) What is the bullwhip measure for the manufacturer?
c) What is the bullwhip measure for the supplier?
d) What conclusions can you draw regarding the impact that economies of scale may have on the bullwhip effect?