Abstract for: Qualitative System Dynamics and the Bullwhip Effect
This paper highlights the potential for cognitive mapping to facilitate a deeper understanding of the Bullwhip Effect causes and their interaction. The Bullwhip Effect occurs whenever the variability of demand is magnified through the supply chain. Four causes of the Bullwhip Effect have been discussed in the literature, namely: demand signal processing, rationing/shortage gaming, order batching and price fluctuations. There have been numerous papers investigating these causes individually, but little attention has been paid to their interaction. A critical element in any model that deals with the Bullwhip Effect is the variance of upstream orders. In this paper we present a generic or archetypal map showing some of the most important factors that influence the variance of orders. Two distinct behavioural factors are highlighted: i) judgemental changes to the forecast and ii) judgemental changes to the order. This distinction has been neglected in much of the academic forecasting literature, but is important in practice. Our cognitive map is generic and would require adaptation for individual circumstances. Other avenues of more research, the findings from which will be presented at the System Dynamics Conference, are also discussed in our extended abstract.