Impact of Learning Effect on , Managerial Reaction to Demand Turbulence

Natarajan, R C (2003) Impact of Learning Effect on , Managerial Reaction to Demand Turbulence. TAPMI, Manipal.

TWP32_03_impact of Learning.pdf

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Inventory function in distribution channels aims at holding optimal stock that ensures the organization's ability to meet demand without incurring stock-outs keeping inventory-holding costs low. In a situation when consumer demand varies from time to time, inventory management involves forecasting and ordering, keeping in mind the time lag that the channel-mechanism involves. Turbulence in consumer's ordering renders it difficult for the channel to estimate consumer-demand accurately. The difficulty is more when the channel member is farther from the consumer in the channel hierarchy. Under such conditions, variations in consumer-demand lead to amplifications of order quantities along the channel-hierarchy, known as bullwhip effect. This paper studies the impact of learning effect on keeping bullwhip effect in check. These two aspects of bullwhip effect have been experimented through a laboratory study and demonstrated in this article. Specifically, it is shown that bullwhip effect will be higher in a situation where the variance in consumer demand is high. It is also demonstrated that learning effect that takes place due to high degree of turbulence enables teams to handle future turbulences better, thus keeping bullwhip effect low. The relevance of this work both to academicians and to corporatist is explained.

Item Type: TAPMI Working Papers
Subjects: Marketing
Divisions: Marketing Management
Depositing User: Ms. Vanitha K
Date Deposited: 17 Nov 2018 06:01
Last Modified: 17 Nov 2018 06:01

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