Production smoothing in a serial supply chain: A laboratory investigation

Abstract

The purpose of this paper is to examine production smoothing in supply chains. Using the controlled setting of the laboratory, we systematically investigate supply chain features that lead to production smoothing. In contrast to prior laboratory studies of the bullwhip effect, we find that the bullwhip effect disappears in several of our experiments. More importantly, our study shows that when customer demand has a predictable seasonal component, retailers smooth orders. This behavior is more pronounced when changing order levels is costly. The results demonstrate how simplifying the structure of the supply chain leads to production smoothing behavior.