| As the world becomes flatter, global supply chains are getting more complex. The object of this dissertation is to explore the impact of supply uncertainty on multi-echelon supply chains. This dissertation is divided into two parts: the reverse bullwhip effect and preventive transshipment.We provide evidence that supply uncertainty can cause the "reverse bullwhip effect" (RBWE), in which demand (order) variability increases as one moves downstream in a supply chain. Compared to the classical bullwhip effect (BWE), which describes the opposite phenomenon, the RBWE may have a more significant impact on the whole supply chain since inventory-related costs tend to be greater downstream than upstream.We apply human experiments and simulation to investigate behavioral causes of the RBWE. Our results confirm previous studies showing that demand uncertainty and an underweighting of the supply line cause the BWE. Moreover, they demonstrate that supply uncertainty (in the form of random disruptions) and an overweighting of the supply line cause the RBWE. We also analyze the operational causes of the RBWE due to supply uncertainty. They are: (1) pricing during disruptions with limited information held by strategic customers, and (2) competition among retailers for scarce supply. We show that when customers react not only to the price itself but also to changes in price, a pricing mechanism implemented by the supplier that does not capture the underlying customer behavior may lead to the RBWE. We also provide results showing that the BWE occurs between retailers and customers and that the RBWE occurs between suppliers and retailers when there is limited or uncertain capacity at the supplier's end.In the second part of this dissertation, we study a decentralized system with two stores who face two demand epochs with preventive transshipments allowed in between to handle both demand and supply uncertainty. We show that there is a unique pair of order quantities achieving a Nash equilibrium, and that transshipments follow a dominant strategy called a control-band-conserving (CBC) transfer policy in the presence of the supply uncertainty. Our study shows that preventive transshipments can improve the system-wide profit as well as each individual player's profit. |
