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Om Session 5 Assignments

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OM Assignments 5
Q1. Is there any evidence that Barilla faces the bullwhip effect? If so, what causes of the bullwhip of the bullwhip effect are present?
The bullwhip effect is an observed phenomenon in forecast-driven distribution channels. It refers to a trend of larger and larger swings in inventory in response to changes in customer demand. We believed there was a bullwhip effect in this case. We found the evidence from Exhibit 12 which showed the mean of the orders from Cortese Northeast DC to Pedrognano CDC was 300 while the standard deviation was only 227, the gap was 73. Because customer demand is rarely perfectly stable, businesses must forecast demand to properly position inventory and other resources. Companies often carry an inventory buffer called "safety stock" which may cost a lot of money. In real commercial society, it is barely to see the stable order and conversely the order always is very volatile, thus causing the bullwhip effect. Secondly, the order batching contributed a lots since the distributers, GD and DO used the periodic ordering by its customers, finally enhance the bullwhip phenomenon.
Q2. What is the logic of the JITD program they are suggesting in implementing? What are benefits and drawbacks of JITD program? Explain your logic in identifying them.
The old distribution model:

The JITD program is to change the distribution model to:

Generally, for company, distribution process involves many stakeholders. Efficient program requires accurate observation of information to guarantee the interests of different stakeholders. Stakeholders | Benefits | Drawbacks | Manufactory in Barilla | Take the initiative to manage their manufacture and inventory;Better understand the market trend and improve the accuracy of the forecast;Keep production level stable;Reduce inventory cost. | Less inventory level might increase the risk of stock out

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