Abstract
Increase in order variance from downstream stage to upstream stage in a supply chain is called bullwhip effect. Bullwhip effect is one of the performance measures of a supply chain. In the present study the impact of backorder in supply chain performance is studied under small lead time of one period by conducting experiments under lost sales and backorder settings using supply chain role play software package. The performance of supply chain under both settings is compared using Wilcoxon statistical test. The results show that the variance of orders is high under backorder than the lost sales setting. The study concludes that backorder is also one of the causes of bullwhip effect.
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