Simulation-Based Statistical Analysis of the Bullwhip Effect in Supply Chains (original) (raw)
Related papers
A SIMULATION STUDY ON THE BULLWHIP EFFECT IN SUPPLY CHAIN
Under the competition among the global market place, enterprises must have skills of dealing with uncertainty. It is known that the lack of information sharing causes the uncertainty. The order variability increase as we move up the supply chain. In this study the bullwhip effect in supply chain is studied. The increase in inventory costs under the bullwhip effect is examined using simulation method. The effect of choosing the right forecasting technique for the demand pattern is taken into account to show its impact on the bullwhip effect.
The bullwhip effect in supply chain networks
European Journal of Operational Research, 2010
The bullwhip effect Frequency domain analysis a b s t r a c t This paper analyzes the propagation and amplification of order fluctuations (i.e., the bullwhip effect) in supply chain networks operated with linear and time-invariant inventory management policies. The supply chain network is allowed to include multiple customers (e.g., markets), any network structure, with or without sharing information. The paper characterizes the stream of orders placed by any supplier for any stationary customer demand processes, and gives exact formulas for the variance of the orders placed and the amplification of order fluctuations. The paper also derives robust analytical conditions, based only on inventory management policies, to predict the presence of the bullwhip effect for any network structure, any inventory replenishment policies, and arbitrary customer demand processes. Numerical examples show that the analytical results accurately quantify the bullwhip effect; managerial insights are drawn from the analysis. The methodology presented in this paper generalizes those in previous studies for serial supply chains. j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / e j o r
Serbian Journal of Management, 2011
Supply chain exists due to the fact that it is difficult for any company to provide all that is required from raw materials to final products and at the same time getting the products to the end users. To have a successful SCM an organization requires a change from managing individual function to integrating activities into key supply chain process. With the recent development in the market place, organizations must consider the issues of increased competition, rising customer expectations, and the demand for
Sharing Strategies to Reduce Fluctuations and Bullwhip Effect in Supply Chains
2004
Supply chain inventories are prone to fluctuations and instability. Known as bullwhip effect, small variations in end item demand create oscillations that amplify throughout the chain. We try to understand the underlying structure that generates bullwhip effect, and explore the effectiveness information sharing to eliminate this type of behavior, by using dynamic system simulation. Extensive parametric analysis is carried out for this purpose. Simulation results show that (i) a major root cause of bullwhip effect is independent demand forecasting performed at each stage of the supply chain and (ii) demand and forecast sharing strategies can significantly reduce but not completely eliminate the bullwhip effect. Our research continues with alternative ordering policies, supply networks and forecasting methods.
THE BULLWHIP EFFECT IN SUPPLY CHAIN
Predicting of demand is the significant tool in order the production planning and provisions, managing the surface or creating levels of personalized services. Predicting demand by many technologies is relying on earlier data and their importance is setting up from patterns utilized heretofore earlier of demand for near future. Of values predicted with regard to high responsiveness for of the ones most current, this approach is obtaining in general high (low) values of demand predicted in accordance to periods high (low) of demand. It is being transferred by demand of clients to wholesalers, distributors or producers in the form of the retail order which is current demand for partners of the chain of supplies of the higher mark at the same time. Forecasts of demand are rarely in practice when thorough and what's more they are still refer to the poor quality higher marks in the chain of supplies. In the majority of chains of supplies, individual participants in the chain are trying to rationalize sizes of one's orders in accordance to economic decisions, what the distortion of real demand of clients is being created, through as well as bad redirection of demand at members of the chain of supplies from upper of its levels. Promotions and price hesitation also have influence for distorting demand The need to predict demand is increasing errors by chances to perform on every level of the chain of supplies in forecasts-called the bullwhip effect (BWE) this way-for the whole supply chain. The seeming effect is creating it of double predicting [8]. And therefore it is so very important determining the operating system correctly of predicting of demand which the bullwhip effect will limit. The regular, simple model of supply chain and its flows consist such participants as: supplier, producer, intermediary or distributor, retailer and customer, all with products and information flows. This structure is presented below on figure 1. So taking into consideration the above mentioned model it is possible to do the graphical presentation of the bullwhip effect in supply chain especially with pressure on its formation.
Journal of Innovation and Technology, 2021
PT XYZ is one of the most company which produce welded steel pipe in Indonesia such as longitudinal and spiral pipes. In order to meet consumer’s demand, this company faced with an obstacle namely the distortion of information in supply chain. Distortion of information from downstream to upstream channel causes the difference between the product demand from consumer to PT XYZ and order of raw materials from PT XYZ to the supplier which is called the bullwhip effect. The objective of this research is to calculate the value of bullwhip effect as well as designing improvements to minimize the bullwhip effect. Based on the research results, obtained the index value of bullwhip effect on longitudinal pipe products is 1.06 and the index value of bullwhip effect on spiral pipe products is 0.80. The improvement design to minimize the phenomenon of bullwhip effect is to build an integrated information system for the customer, manufacturer, and supplier. The method that is used to improve the...
BULLWHIP EFFECT IN SUPPLY CHAIN
A demand variability increase when it moves downstream to upstream in a supply chain, this phenomenon is known the 'Bullwhip effect'. This Bullwhip effect creates pile upon unnecessary inventory in the supply chain and reductions of this make a significant role. In this paper bullwhip effect causes are analyzed and the reducing measures are suggested, such as: Establishing the information sharing mechanism, Coordinating benefit of information sharing, establishing the strategic alliance, strengthening the cooperation & trust, strengthen the stock managing and reduce the lead time of the supply .
Quantifying the bullwhip effect in supply chains
Consider multiple companies operating as a serial supply chain. Within this environment, end users form the demand for the last company in the supply chain, but the demand for upstream companies is formed by the companies in the immediate downstream supply chain link. It has been shown that demand seasonality and forecast error can increase as we proceed up the supply chain. These demand distortions, called the "bullwhip" effect, create inefficiencies for upstream firms. This work seeks to identify the magnitude of the problem by establishing an empirical lower bound on the profitability impact of the bullwhip effect. Results indicate that the importance of the bullwhip effect to a firm differs greatly depending on the specific business environment. Given appropriate conditions, however, eliminating the bullwhip effect can increase product profitability by 10-30%.
The effect of information sharing on supply chain stability and the bullwhip effect
European Journal of Operational Research, 2007
This paper analyzes the bullwhip effect in multi-stage supply chains operated with linear and time-invariant inventory management policies and shared supply chain information. Such information includes past order sequences and inventory records at all supplier stages. The paper characterizes the stream of orders placed at any stage of the chain when the customer demand process is known and ergodic, and gives an exact formula for the variance of the orders placed. The paper also derives robust analytical conditions, based only on inventory management policies, to predict the presence of the bullwhip effect and bound its magnitude. These results hold independently of the customer demand. The general framework proposed in this paper allows for any inventory replenishment policies, any ways of sharing and utilizing information, and any customer demand processes. It is also shown as a special case that sharing customer demand information across the chain significantly reduces, but does not completely eliminate, the bullwhip effect.
2006
Robust, multi-echelon dynamical models are proposed for better understanding of the bullwhip effect in supply chains and for testing of strategies that mitigate it. Enterprise-wide visibility through IT and Extranet data access between trading partners and is one such strategy. Other strategies include ordering policies that do not entail the immediate replacement of used safety stocks, expanded workweek to absorb the surges in production demand. Still other strategies are possible, such as adding additional supply lines for upstream supplies. The models presented build upon existing state-of-the-art models in system dynamics as presented in existing system dynamics literature. 1.0 INTRODUCTION Supply Chains are complex physical systems that behave badly when typical managerial practices are applied to them. For example, quantity discounts, promotional pricing, and media blitzes are examples of marketing ploys that raise havoc with the supply chain. Supply chains are the entire ente...