able and any comparative advantages will not be sustainable. Information with regard to needed resources, planned activities, and changes in curriculum must change hands freely and in the timeliest possible manner.1.3.1 STRATEGIESBefore discussing how to apply the principles found in studying the bullwhip effect, lets first look at two general strategies for reducing the bullwhip effect so as to gain further insight into this phenomenon. Looking back to Figure 1, add the box entitled belt manufacturer to the example discussed before, and now consider that it to must forecast what belts it should make in order to have them ready to ship in the moment they are demanded. To do so, the belt manufacturer must order raw materials from their materials supplier (relationship is not depicted). Depending upon the approach taken on how customer demand data is shared over this entire three-tier chain, the bullwhip effect will either become additive or multiplicative.1.3.2 CENTRALIZED INFORMATIONIn this approach, customer demand data are shared freely with all links in the supply chain. When the franchise places an order with the Orem Studio, the order is accompanied by the original customer demand data. When the Orem Studio places an order with the belt manufacturer, the order is accompanied by the original customer demand data. And when the belt manufacturer places an order for raw materials, the order is accompanied with the original customer demand data. Essentially, this eliminates the need for each link in the chain to predict the future. All activities are based on one prediction instead of multiple ones. Because of this, the bullwhip effect equation can account for extra links by simply adding the lead times for each link in the chain (Chen, pp. 440-41). The resulting equation is: (5)The mathematical derivation of this equation can be found on pages 440 and 441 of the Chen, Drezner, Ryan and Simchi-Levi article.To see this princip...
