Study finds real time can derail supply chains
By Staff -- Manufacturing Business Technology, 2/1/2006 12:00:00 AM
Two computer-based experiments recently studied the effect of feedback frequency on performance, in which subjects acted as new vendors dealing with inventory orders, and a "virtual factory" management simulation allowed participants to apply inventory management, lot sizing, and process control in a realistic environment.
"If retailers could choose a monthly, weekly, or daily recap of Campbell's tomato soup sales, which recap frequency would they choose? Many would select the daily recap, thinking it would give them a competitive edge," says Nicholas Lurie, assistant professor of marketing at Georgia Tech College of Management. "However our study finds that when a manager is given more frequent information on product demand, decision-making performance actually decreases, particularly in environments characterized by a high degree of variability."
Beyond the supply chain, research shows stock traders, given real-time feedback, tend to trade more frequently in response to price movements that might simply be random.
