Reverse bullwhip effect: duality of a dynamic model of Supply Chain (original) (raw)
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The control of local stability and of the bullwhip effect in a supply chain
The bullwhip effect refers to the phenomenon of demand distortion in a supply chain. By eliminating or controlling this effect, it is possible to increase product profitability. The main focus of this work is to apply a recent developed control technique to reduce the bullwhip effect in a single-product serial supply chain in which an Order-Up-To order policy is applied. The control strategy is based on controlling the divergence of the supply chain considered as a non-linear dynamical system. First, the relationships between bullwhip, stability of the supply chain and total costs is studied, then, the divergence based control strategy is applied to stabilize the supply chain dynamic with a consequent reduction of the total costs and bullwhip effect.
Stability Control in a Supply Chain: Total Costs and Bullwhip Effect Reduction
The Open Operational Research Journal, 2008
The bullwhip effect refers to the phenomenon of demand distortion in a supply chain. By eliminating or controlling this effect, it is possible to increase product profitability. The main focus of this work is to apply a control technique, based on the divergence of system, to reduce the bullwhip effect in a single-product one echelon supply chain, in which an Order-Up-To (OUT) order policy is applied. First the relationships between bullwhip, stability of the supply chain and the total costs are analyzed. Second the divergence-based control strategy is applied to stabilize the supply chain dynamics with a considerable reduction of the total costs (> 30%) and, in relevant cases, of the bullwhip effect.
Reducing the Bullwhip effect in a supply chain network by application of optimal control theory
RAIRO - Operations Research, 2018
Controlling the bullwhip effect and reducing the propagated inventory levels throughout the supply chain layers has an important role in reducing the total inventory costs of a supply chain. In this study, an optimal controller that considers demand as control variable is designed to dampen propagated inventory fluctuations for each node throughout the supply chain network. The model proves to be very useful in revealing the dynamic characteristics of the chain and provides a proper interface to study decisions taken into account at each node of the supply chain in different periods by decision makers (DMs). In the proposed approach, two feedback loops and online updated values of net stock quantities are used for calculation of the orders. To investigate the efficiency of the proposed approach, a real case of bicycle industry is conducted. The acquired results justify the efficiency of the proposed approach in controlling and dampening the bullwhip effect and reducing inventory lev...
Study of a supply chain system with the presence of bullwhip effect
MATEC Web of Conferences, 2018
A study has been conducted to understand the effect of bullwhip phenomenon in a supply chain system. The hypothetical data collected from the study is used to make a model which can be used to simulate the operation of the system with moderate complexity. System dynamics approach is used to create an open loop system. The phenomenon used is slightly modified and empirically analysed to bring down its adverse effect on the system. The results obtained graphically are emphasising the effect of bullwhip on the various levels of the supply chain system.
A Bullwhip Type of Instability Induced by Time Varying Target Inventory in Production Chains
2012
We present an analytic investigation of the bullwhip effect developing in production-distribution chains. All common considered causes of the effect are excluded and the only mean to induce a bullwhip type of instability is the adoption of an inventory replenishment policy involving a variable target level. The policy is designed to maintain a safety stock that is proportional to the actual demand. In order to achieve our goals we develop a particular discrete model of supply chains by introducing some fresh concepts into the field of supply chain stability. The basic idea is to derive an update scheme describing the status of the whole chain over the entire time-space (period-stage) domain of interest. We prove that the strategy of demand driven target inventory inherently leads to an instability developing in the chain, which is precisely a manifestation of the bullwhip effect. Following the identification of the source and the nature of the instability, we propose a new productio...
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
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...
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.
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.
Supply chains show comparative advantages over traditional integrated manufacturing systems in terms of flexibility and quick adjustment to demand variations. However, the tendency to amplify demand variations upward the supply chain, known as the bullwhip effect, has been identified as a major drawback. This study proposes a modelling framework that allows for comparing several production and ordering policies: an inventory-based policy, an order-based policy and a mean-demand-driven policy.