Central applications of Tesfay coordination in transportation supply chain: Case of airline industry

This paper is extensions of the Tesfay (2014) paper on the Bullwhip effects and Tesfay (2015) paper on the foundations of the Bullwhip effect and its implications on the theory of organizational coordination. The major outcome of the Tesfay (2014) paper suggests that one way or another Bullwhip effect attacks all the business collaborates in supply chain. The major outcome of the Tesfay (2015) paper suggests that the solutions from the transaction cost economics are still insufficient to produce the most efficient organizational coordination. This paper extends stochastic analysis by applying various panel data regression models and structural equations of seemingly unrelated regression (SUR) models on the experimental data from Beer game. Recursive autoregressive-SUR model estimation result confirmed that the Bullwhip effects can be cause by both intra-organizational coordination and inter-organizational coordination of the business collaborates of supply chain. In order to control the effect of intra-organizational coordination on the Bullwhip effects, the author outline a new coordination type known as the hyper-hybrid coordination. As a final point, the author has shown important applications of the hyper-hybrid coordination in the airline industry. •This article designed to test three hypotheses of modern supply chain management (SCM) challenges using various quantitative models.•The fit of RAR-SUR model predicts that Bullwhip exists due lack of proper intra- and inter-organizational coordination of each business collaborates in the supply chain.•The outcome of the causality analysis implied drawbacks of transaction cost analysis (TCA).•As the result, the author invented a Tesfay coordination to fill the drawbacks of TCA.•Finally, the author showed how to formulate productive strategic alliances in the airline industry using Tesfay coordination.