Changing risk preferences in supply chain inventory decisions |
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Authors: | Kuo-Ting Hung Sungmin Ryu |
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Affiliation: | 1. Information Systems and Operations Management, Suffolk University , Boston, MA, USA khung@suffolk.edu;3. School of Business, Sungkyunkwan University , Seoul, South Korea |
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Abstract: | The risk preferences of managers may cause their inventory ordering decisions to deviate from the optimal policy. Past studies in operations management have produced mixed results. This study examines this proposition using decision data collected from a supply chain experiment. This article finds that changing the risk preferences of managers with respect to demand changes and supplier failures is a significant behavioural factor in explaining deviations in ordering decisions. This result provides an additional behavioural cause in explaining the bullwhip effect in supply chains. It also provides insights on the challenges for reducing the bullwhip effect in supply chains. |
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Keywords: | bullwhip effect supply chain management inventory decision Beer Game |
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