Contd...

Hence we can easily calculate the bullwhip at retailer and it is given by

(9.4)

while that at retailer it is

(9.5)

here:

 = Retailer order quantity
 = Customer demand quantity
 = Warehouse order quantity
 = Correlation coefficient for the demand process

For a better illustration we show the variation of the bullwhip effect with lead time and correlation coefficient and Figure 9.6 shows the variations at the warehouse level.

Fig. 9.6: Bullwhip effect at the warehouse level, , for different values of , i.e., lead time