CALCULATING THE BULLWHIP EFFECT. Chieh Lee Metals, Inc. orders sheet metal and transforms it into 50 formed tabletops that are sold to furniture manufacturers. The table below in Figure 11.S2a shows the weekly variance of demand and orders for each major company in this supply chain for tables. Each firm has one supplier and one customer, so the order variance for one firm will equal the demand variance for its supplier. Analyze the relative contributions to the bullwhip effect in this supply chain.
APPROACH \blacktriangleright Use Equation (S11-2) to calculate the bullwhip measure for each firm in the chain.
Bullwhip = \frac{Variance of orders}{Variance of demand} = \frac{\sigma^2_{orders}}{\sigma^2_{demand}} (S11-2)
