ata for the purposes of comparison.Table 13 tier4 tier5 tierCentralized250%325%444%Decentralized264%429%697%1.4 CONCLUSIONEven though the bullwhip effect cannot be completely eliminated, there are things that can be done to reduce its effects. First, always be sure that you use a centralized information system to minimize the need to forecast at each link in the supply chain. Secondly, try to eliminate lead-times. The faster each link is able to respond to the demand of others, the smaller the relative variances will be from link to link. And thirdly, make sure that you only forecast when you absolutely have to. In the example of the franchise, there is no reason that the demand of belts should be forecasted. A student only needs a belt once it has been earned. A student earns a belt only after a very slow and structured process is completed. It should be easy for the franchise to calculate the exact number of belts needed for any given period.In addition, it is important to note how these principles can be applied to many of the un-quantifiable activities found in a karate studio. To illustrate the first two principles, lets consider the information chain of the karate studio example. The pattern of information dissemination flows from the leadership, to the teachers, to the students, to the parents, and finally to friends and family. When the date of an event is planned and the information is made public, it is important that the effects of variance are limited by using a centralized information system, and that the lime it takes to travel down the chain is also minimized. If the information is allowed to simply trickle down through the information chain and the information is decentralized, the legitimacy of the information will be questioned, and the content of the information will change as it passes from person to person (a type of bullwhip effect as one person speculates the truth based on what was heard from some ind...
