Bullwhip in a Spanish Shop

Lai, Richard (2005): Bullwhip in a Spanish Shop.

Abstract

Sebastian de la Fuente is the sixth largest supermarket chain in the Basque region of Spain. It has a novel dataset of 108,605 observations on 3,745 SKUs, collected for almost 2 1/2 years. I find the bullwhip effect in the data: at least 80% of the SKUs have a bigger variance in supplies than variance in sales. I also test six potential causes of the bullwhip, and report clear evidence for three: a rational cause (batching by the supermarket) and two behavioral ones (under-reaction to lags and coordination risks).

• Item Type: MPRA Paper
• Institution: Harvard Business School
• Language: English
• Keywords: Bullwhip effect; retail; operations management; behavioral
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design; M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M11 - Production Management