A human experiment on inventory decisions under supply uncertainty

Controlled human experiments are adopted in this paper to investigate the impact of supplyuncertainty on buyers’ inventory management. The experiments aim at assessing the impact of onespecific source of supply chain uncertainty, namely stochastic lead times, on inventory holding sand theextent of the bullwhip effect.Three experimental treatments are run within the framework of the beergame manipulating variability in demandand in leadtimes. Results confirm that the bullwhip effectarises in all experimental treatment sand that the variance of orders is higher under stochastic leadtimes. Analysis of players’ behaviour in the course of the game suggests that players react to higheruncertainty by holding fewer inventories, a behaviour consistent with the predictions of somepsychological models of choice under ambiguity.