Price variabilities across supply chains: a study based on US industry census data Online publication date: Mon, 10-Apr-2023
by Libo Sun; Xiaohui Xu
International Journal of Logistics Economics and Globalisation (IJLEG), Vol. 10, No. 1, 2023
Abstract: The bullwhip effect (BWE) predicts that the demand variabilities in the upstream supply chain are larger than those in the downstream operations. Many researchers have examined BWE behaviour and operational causes and countermeasures either via theoretical, experimental, or empirical studies. However, recent game theory modelling research indicates under certain conditions, a reverse bullwhip effect (RBE) in pricing may exist at some segments of a supply chain. Our research utilises the US industry level price data to examine if a sector amplifies or dampens the price variances, identifying the existence of BWE or RBE in each sector. We further characterise the major US domestic supply chains pricing variability pattern by using the simple price smoothing ratio and price trend smoothing ratio. Our empirical study enhances the theory of the BWE and reverses BWE by addressing the price volatilities along the supply chain based on a comprehensive dataset.
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