The bullwhip effect, demand uncertainty, and cost structure

• 成果类型: Article
• 署名作者: Chen, Clara Xiaoling; Liang, Jing; Yang, Shilei; Zhu, Jing
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Chengdu University of Technology; Southwestern University of Finance & Economics - China; Southwestern University of Finance & Economics - China
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12908
• 发表日期: 2024
• 页码: 195-225
• 关键词: Supply chain; information-technology; empirical-analysis; behavioral causes; Great Moderation; decision-making; inventory; management; RISK; variability

摘要

The firm-level bullwhip effect is the amplification of demand uncertainty along a supply chain-that is, fluctuations in production (for manufacturing firms) or purchases from suppliers (for retailers or wholesalers) in a firm tend to be greater than its demand fluctuations. We predict that the bullwhip ratio (a proxy for the bullwhip effect) amplifies the relation between demand uncertainty and cost structure. We expect this amplifying effect because the bullwhip ratio determines the extent to which demand uncertainty translates into uncertainty in production or purchases, which, in turn, affects cost structure. Using data from public US firms over the 1990-2020 period, we find results consistent with our prediction. Specifically, we find that both the negative relation between demand uncertainty and cost elasticity in the manufacturing sector and the positive relation between the two in the retail/wholesale sectors are stronger for firms with higher bullwhip ratios. We contribute to the literature on cost structure by highlighting the important role of the bullwhip effect in cost structure decisions.