Four causesLee, Padmanabhan & Whang (1997): demand-signal processing (forecasting from orders, shown here), order batching, rationing and shortage gaming, and price fluctuations.
One stage, moving-average forecastVar(q)/Var(D) ≥ 1 + 2L/N + 2L²/N²
L = lead time + one review period, N = weeks in the moving average. Longer lead times or shorter memory amplify more.
Whole chainno sharing: Π (1 + 2Lᵢ/N + 2Lᵢ²/N²)
sharing: 1 + 2ΣLᵢ/N + 2(ΣLᵢ)²/N²
Without shared data the factors multiply; with shared data the lead times add. Sharing reduces the effect but does not remove it.
MIS curesPoint-of-sale data sharing, EDI, vendor-managed inventory (VMI), collaborative planning (CPFR), and shorter lead times. These are information-system decisions with direct cost effects.