Barillia Essay

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Barilla SpA (Part A) Case Assignment Questions 1. Barilla is clearly suffering from a bullwhip effect in its supply chain. What are the underlying reasons why a bullwhip effect exists? What problems does this bullwhip effect create for Barilla? Each category listed below are possible causes of the bullwhip, some causes could be placed in multiple categories. •Demand forecast updating 1. Order history 2. Forecasting is always subjective 3. Exponential smoothing 4. Safety stock 5. Order can be added by the salesperson • Order batching 6. Periodic ordering 7. Push ordering 8. Waiting for full truckload (FTL) 9. Salespeople reaching monthly or quarterly goals • Price fluctuation 10. “Canvass” periods 11. Forward buying 12. Buying low and stocking up 13. Loss or damaged products when overstocked • Rationing and shortage gaming 14. Inventory reviews are sometimes less than accurate 15. Order in larger quantities to make up for shortages or rationing 16. No grasp on the actual amount and real demand for their product. Demand forecast updating All companies use forecasting as a means for production, scheduling and inventory control. Order history is used as a basis to determine the demand for the customer’s future needs. The historical data is useful to forecast future needs for shipping and sales inventory. The future orders generally are subject to the demand signaling process. The process along the ordering chain is controlled by each level’s perception of what they need. This process is a major contributor to the Bullwhip effect. Information is subject to delay, forecasting is always subjective, as each firm uses different techniques, and the order quantity for a future period very often includes a very subjective “hunch” on the part of the planner. A retailer will forecast what

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