Definition of Uncertain Information

The term uncertainty refers to the difference between the information that a firm already has and the information that is

required to achieve a specific goal. The traditional way of dealing with uncertainty

is to set up inventories or provide excess

production capacity. This approach, in hindsight, is costly and

inefficient. In today's increasingly competitive market environment

, the key mark of a successful business is the ability to respond quickly to the needs of the end customer

. As a result, competition between business organizations

is being replaced

by competition between supply chains. Supply chain management is not only about recognizing the service level requirements of the end-customer,

specifying where in the supply chain to set up

inventory and how high or low to set up inventory, but also about eliminating

all kinds of uncertainties that affect the performance of the supply chain operations.

Uncertainty in the supply chain can manifest itself in three ways:

! Articulation Uncertainty. Between firms! or departments& of the

uncertainty, is the supply chain interface uncertainty, which

mainly reflected in the enterprise! or departments& cooperate with each other."

Operational uncertainty. This is mainly embodied in system operational instability

and control failure, system operational instability is the result of the lack of effective communication, coordination and control mechanisms within the organization

and control

failure is due to the instability and uncertainty of the organization's management

. #Environmental uncertainty, which refers to the changes in the natural,

human and policy environments that bring

uncertainty to the supply chain.

The impact of uncertainty is wide-ranging, affecting the demand, supply, and production decision-making aspects of the supply chain

and in

many cases, can have a significant negative effect. A classic example of this is the effect of uncertainty

on demand decisions,

which is known as the bullwhip effect. Typically, each node in the supply chain

makes production or supply decisions based only on demand

information from its neighboring downstream firms, and each node firm

often hides some important internal information, such as sales

sales, inventory levels, and delivery schedules, from its suppliers

out of concern for its own interests. schedules, etc. In this way, the demand information obtained by upstream firms is often

inaccurate and delayed. Even when end-customer demand

is stable, institutional factors such as organizational structure, equipment production capacity, inventory and transportation tools, or chance can cause demand to reverse

the cyclical nature of demand along the supply chain from node to node and to the endpoints

. The demand information obtained by suppliers is more variable than that obtained by retailers, i.e., demand

distortion, which is a gradual expansion of demand up the supply chain

trend, a phenomenon Prof. 123 45 466 calls the bullwhip

effect. The result of the bullwhip effect is an increase in supply chain costs

, which have been estimated to be between 12.5% and 25% of normal

costs.