A retail home supply chain forecasts the following sales of wheelbarrows over the upcoming 8 weeks. It will purchase them from a wholesale firm, which in turn will buy them from a manufacturer.
Each firm's inventory policy is to maintain a safety stock (ending inventory) equal to its most recent week's demand.
Assume each firm begins with 400 units of starting inventory.
|
Week
|
Retail Sales Qdr
|
|
1
|
400
|
|
2
|
390
|
|
3
|
450
|
|
4
|
510
|
|
5
|
610
|
|
6
|
470
|
|
7
|
420
|
|
8
|
410
|
a. Find the weekly quantities demanded by the retailer from the wholesaler (Qdw), and by the wholesaler from the manufacturer (Qdm). Assume each firm starts in week 1 with a beginning inventory of 400 units.
b. Did either the retailer or the wholesaler have excess inventory, and if so, how much and in what week(s)?
c. Find the mean, standard dev. and coefficient of variation for Qdr, Qdw and Qdm. What do you conclude about the variability of demand for these firms? What is this pattern called?
d. Briefly explain how the bullwhip effect relates to an industry's inventory/sales ratio. You can use our numerical example above as an illustration.
What is the likely cause of the pattern that you see here?
As of the most recent date shown, (Dec 2016 on the day I looked) what is the current (seasonally adjusted) inventory/sales ratio for these 4 categories of goods: 441 Motor Vehicles, 442,3 Furniture (and related items); 445 Food and Beverage stores; and 448 Clothing? Why do you think these ratios differ by industry?
|
NAICS
Code
|
Kind of Business
|
Sales
|
Inventorie
|
Percent Change
In Inventories
|
Inventories/Sales
Ratios
|
|
Dec. 2016
ID)
|
Nov. 2016
(0
|
Dec. 2015
(r)
|
Dec. 2016
U0
|
Nov. 2016
(0
|
Dec. 2015
(r)
|
Dec. 16/
Nov. 16
|
Nov. 16/
Oct. 16
|
Dec. 16/
Dec. 15
|
Dec. 16
(o)
|
Nov. 16
(r)
|
Dn. 15
(I)
|
|
|
Adjusted'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail trade. total............................................
|
415.242
|
410.174
|
396.893
|
609.010
|
608.687
|
588.432
|
0.1
|
0.9
|
3.5
|
1.47
|
1.48
|
1.48
|
|
|
Total (excl. motor veh. & parts)........................
|
315.891
|
313.906
|
304.346
|
395.719
|
394.198
|
390.279
|
0.4
|
0.5
|
1.4
|
1.25
|
1.26
|
1.28
|
|
441
|
Motor vehicle di parts dealers..................................
|
99.351
|
96.268
|
92.547
|
213.291
|
214.489
|
198.153
|
-0.6
|
1.6
|
7.6
|
2.15
|
2.23
|
2.14
|
|
442.3
|
Furniture.home furn.. elect. di appl. stores................
|
17.222
|
17.390
|
17.458
|
26.795
|
26.883
|
27.352
|
-0.3
|
0.1
|
-2.0
|
1.56
|
1.55
|
1.57
|
|
444
|
Budding materials, garden equip & supplies.............
|
30.198
|
29.838
|
29.201
|
54.944
|
54.770
|
52.392
|
0.3
|
1.0
|
4.9
|
1.82
|
1.84
|
1.79
|
|
445
|
Food & beverage stores........................................
|
59.249
|
59.379
|
57.848
|
46.225
|
45.866
|
44.920
|
0.8
|
0.4
|
2.9
|
0.78
|
0.77
|
0.78
|
|
448
|
Clothing di clothing access. stores............................
|
21.481
|
21.458
|
21.224
|
54.209
|
54.050
|
53.765
|
0.3
|
0.8
|
0.8
|
2.52
|
2.52
|
2.53
|
|
452
|
General merchandise stores...................................
|
55.300
|
55.522
|
56.821
|
80.809
|
80.629
|
82.378
|
0.2
|
0.3
|
-1.9
|
1.46
|
1.45
|
1.45
|
|
4521
|
Dept. strs. (excl. leased depts.)..........................
|
12.591
|
12.665
|
13.754
|
26.997
|
26.955
|
28.567
|
0.2
|
-0.1
|
-5.5
|
2.14
|
2.13
|
2.08
|
|
|
Not Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail trade. total..............................................
|
484.678
|
415.243
|
463.668
|
602.475
|
640.946
|
581.931
|
-6.0
|
1.7
|
3.5
|
1.24
|
1.54
|
1.26
|
|
|
Total (excl. motor veh. di parts)........................
|
385.105
|
326.439
|
371.352
|
386.537
|
422.579
|
380.982
|
-8.5
|
1.0
|
1.5
|
1.00
|
1.29
|
1.03
|
|
441
|
Motor vehicle & parts dealers.................................
|
99.573
|
88.804
|
92.316
|
215.938
|
218.367
|
200.949
|
-1.1
|
3.1
|
7.5
|
2.17
|
2.46
|
2.18
|
|
442.3
|
Furniture.home furn.. elect. & appl. stores................
|
23.334
|
19.876
|
23.695
|
27.036
|
30.754
|
27.626
|
-12.1
|
5.6
|
-2.1
|
1.16
|
1.55
|
1.17
|
|
444
|
Building materials, garden equip di supplies...............
|
27.522
|
29.053
|
27.044
|
52.032
|
53.072
|
49.615
|
-2.0
|
-0.8
|
4.9
|
1.89
|
1.83
|
1.83
|
|
445
|
Food & beverage stores........................................
|
65.048
|
59.290
|
62.673
|
46.867
|
48.071
|
45.558
|
-2.5
|
1.8
|
2.9
|
0.72
|
0.81
|
0.73
|
|
448
|
Clothing & clothing access. stores............................
|
34.333
|
23.438
|
33.123
|
51.119
|
58.320
|
50.647
|
-12.3
|
0.5
|
0.9
|
1.49
|
2.49
|
1.53
|
|
452
|
General merchandise stores...................................
|
75.135
|
60.535
|
76.391
|
77.439
|
91.171
|
78.928
|
-15.1
|
0.3
|
-1.9
|
1.03
|
1.51
|
1.03
|
|
4521
|
Dept. strs. (excl. leased depts.)..........................
|
21.687
|
15.210
|
23.425
|
25.188
|
31.915
|
26.624
|
-21.1
|
-1.7
|
-5.4
|
1.16
|
2.10
|
1.14
|