Design, Analysis and Optimization of Supply Chains

Introduction

Reading the Wall Street Journal in January of 2010, I did a double take when I saw the title of a front-page article: “‘Bullwhip’ Hits Firms as Growth Snaps Back.”¹ The title seemed truly unbelievable. The article recounted how Caterpillar had recently told its steel suppliers that it would more than double its purchases of the metal in the coming year—even if Caterpillar’s own sales stayed flat. The Journal rhetorically asked, “How is that possible?” and then gave the answer as, “Chalk it up to the ‘bullwhip effect,’ which is reverberating across the U.S. economy.” Wait a minute! The bullwhip is “reverberating across the U.S. economy”? I thought the bullwhip problem had been solved by Massachusetts Institute of Technology (MIT) ...