Research on Bullwhip Effect Management in Supply Chain Based on System Dynamics

To study the bullwhip effect (BWE) in supply chain (SC), this paper built two system dynamics (SD) models strictly referring to the AR(1) (autoregressive process) model constructed by Frank Chen. Using Vensim simulation software, it analyzed the impact of the correlation coefficient of demand, lead time, smoothing time of demand and information to BWE, and then put forward some proposals on how to reduce BWE. By contrasting the simulation results of SD models with the AR(1) models', it verifies the validity of the AR(1) model of Frank Chen from a simulation perspective. It also shows SD model combined with AR(1) model can analyze BWE in SC reliably and powerfully.

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System dynamics comparison of three inventory management models in an automotive parts supply chain

Journal of Transport and Supply Chain Management ◽

10.4102/jtscm.v11i0.281 ◽

2017 ◽

Vol 11 ◽

Cited By ~ 2

Author(s):

Andries Botha ◽

Jacomine Grobler ◽

V.S. Sarma Yadavalli

Keyword(s):

Supply Chain ◽

System Dynamics ◽

Inventory Management ◽

Bullwhip Effect ◽

Dynamics Simulation ◽

Management Approach ◽

Damping Factor ◽

Theoretical Derivation ◽

Automotive Parts ◽

Moving Parts

Background: The automotive parts supply chain measures its success in terms of parts availability and stock required to achieve the availability target, measured as allocation fill rate (AFR). The supply chain strives to achieve an AFR target of 95.5% while maintaining low levels of stock.Objective: The first objective of this study is to evaluate the current inventory management approach, namely the maximum inventory position (MIP) method, to understand the difference between the theoretical derivation and the actual implementation. The second objective is to develop and compare the performance of a new stock target setting (STS) method relative to the MIP methods.Method: The theoretical and actual equations behind the MIP and STS methods are derived for steady state as well as stochastic conditions. A system dynamics simulation model (SDSM) was developed to describe both the local and imported supply chains. The SDSM was used to simulate and confirm the parameters for the STS method. It was also used to compare the three inventory management methods against a theoretical environment and actual data sets.Results: The STS method requires a damping factor (DF) to ensure it does not cause the bullwhip effect. The SDSM was used to determine that a value equal to the lead time ensures effective damping. In the theoretical environment, the MIPTheory method requires the lowest stock, but also has the lowest AFR. MIPActual achieves the highest AFR, but with significantly higher stock holding. The STS method improves on the AFR achieved by the MIPTheory method, with lower stock holding than the MIPActual method. With the actual demand data sets, the results vary by parts movement type. With fast moving parts, all methods achieve the AFR target, the MIPActual method has a higher stock holding for all cases, and the STS method results in reduced stock holding for 7 of 12 cases. With medium moving parts, the MIPActual method improves on the AFR in all 15 cases, but with significantly higher stock. The STS method increases the AFR in 7 of 15 cases and reduces the stockholding in 11 of 15 cases. With slow moving parts, both the MIPActual and STS methods improve the AFR with increased stock holding. The increase in stock holding for the STS method is significantly lower. With erratic moving parts, the MIPActual method improves on the AFR in all 17 cases, but requires significantly higher stock holding. The STS method achieves lower AFR values in 10 of 17 cases, but also requires lower or equal stock holding in 10 of 17 cases.Conclusion: The STS method provides a new approach to inventory management in the automotive supply chain. It provides improved performance for lower stock holding than the implemented MIP method (MIPActual). The results for the different movement category suggest that there is further research to be done to confirm the effectiveness of the various methods with other demand distributions.

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Recycler Reaction for the Government Behavior in Closed-Loop Supply Chain Distribution Network: Based on the System Dynamics

Discrete Dynamics in Nature and Society ◽

10.1155/2015/206149 ◽

2015 ◽

Vol 2015 ◽

pp. 1-11 ◽

Cited By ~ 4

Author(s):

Xi gang Yuan ◽

Xiao qing Zhang

Keyword(s):

Supply Chain ◽

System Dynamics ◽

Government Policy ◽

Distribution System ◽

Closed Loop ◽

Distribution Network ◽

Bullwhip Effect ◽

Order Quantity ◽

Closed Loop Supply Chain ◽

The Government

With system dynamics, we establish three-closed-loop supply chain distribution network system model which consists of supplier, manufacturer, two retailers, and products (parts) recycler. We proposed that recycler make reflect for the government policy by adjusting the recycling ratio and recycling delay. We use vensim software to simulate this model and investigate how the products (parts) recyclers behavior influences the loop supply chain distribution system. The result shows that (1) when recyclers respond positively to government policies, recycling will increase the proportion of recyclers. When recyclers respond negatively to government policy making, recycling will reduce the proportion of recyclers. (2) When the recovery percentage of recyclers improves, manufacturers, Retailer 1, and Retailer 2 quantity fluctuations will reduce and the bullwhip effect will diminish. (3) When the proportion of recycled parts recyclers is lowered, manufacturers, Retailer 1, and Retailer 2 inventory fluctuation will increase and the bullwhip effect will be enhanced. (4) When recyclers recycling product delays increased, volatility manufacturers order quantity will rise, but there is little change in the amount of fluctuation of orders of the two retailers. (5) When recycling parts recyclers delay increases, fluctuations in the supplier order quantity will rise, but there is little change in the amount of fluctuation of orders of the two retailers.

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The System Dynamics Analyses of Bullwhip Effect in China Processed Oil Supply Chain

Applied Mechanics and Materials ◽

10.4028/www.scientific.net/amm.295-298.3310 ◽

2013 ◽

Vol 295-298 ◽

pp. 3310-3317 ◽

Cited By ~ 1

Author(s):

Ji Hai Zhang ◽

Quan Quan Zhang

Keyword(s):

Supply Chain ◽

System Dynamics ◽

Bullwhip Effect ◽

Simulation Software ◽

Operating Efficiency ◽

Dynamics Analysis ◽

Chain Management ◽

Oil Supply ◽

Effective Strategies ◽

Dynamics Analyses

Bullwhip effect is a serious problem in supply chain management, it brings about production disorder, inventory imbalance, business process obstruction, waste of resources and market chaos. Our processed oil supply chain is so a large complicated system that bullwhip effect of it is more serious. To deal this problem, this paper discussed China processed oil supply chain, aim at maintaining processed oil supply, analysed the strength of bullwhip effect in the chain, proved delay is the basic reason of bullwhip effect and pointed out reducing delay is the key point to weaken bullwhip effect. We used system dynamics analysis and Anylogic simulation software to get the conclusion. Finally, we put forward some effective strategies to deal with bullwhip effect in China processed oil supply chain for improving the chain's operating efficiency.

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The System Dynamics Model in Electronic Products Closed-Loop Supply Chain Distribution Network with Three-Way Recovery and the Old-for-New Policy

Discrete Dynamics in Nature and Society ◽

10.1155/2016/4074710 ◽

2016 ◽

Vol 2016 ◽

pp. 1-10 ◽

Cited By ~ 5

Author(s):

Xiao-qing Zhang ◽

Xi-gang Yuan

Keyword(s):

Supply Chain ◽

System Dynamics ◽

Closed Loop ◽

Distribution Network ◽

Bullwhip Effect ◽

Raw Material ◽

System Dynamics Model ◽

Dynamics Model ◽

Closed Loop Supply Chain ◽

Electronic Products

With the technological developments and rapid changes in demand pattern, diverse varieties of electronic products are entering into the market with reduced lifecycle which leads to the environmental problems. The awareness of electronic products take-back and recovery has been increasing in electronic products supply chains. In this paper, we build a system dynamics model for electronic products closed-loop supply chain distribution network with the old-for-new policy and three electronic products recovery ways, namely, electronic products remanufacturing, electronic component reuse and remanufacturing, and electronic raw material recovery. In the simulation study, we investigate the significance of various factors including the old-for-new policy, collection and remanufacturing, their interactions and the type of their impact on bullwhip, and profitability through sensitivity analysis. Our results instruct that the old-for-new policy and three electronic products recovery ways can reduce the bullwhip effect in the retailers and the distributors and increases the profitability in the closed-loop supply chain distribution network.

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Study of a supply chain system with the presence of bullwhip effect

MATEC Web of Conferences ◽

10.1051/matecconf/201814405003 ◽

2018 ◽

Vol 144 ◽

pp. 05003

Author(s):

Ayush Shrivastava ◽

Raghavendra Kamath ◽

Himanshu Sharma ◽

Ajitesh Gogoi

Keyword(s):

Adverse Effect ◽

Supply Chain ◽

System Dynamics ◽

Bullwhip Effect ◽

Open Loop ◽

Open Loop System ◽

Supply Chain System ◽

Chain System ◽

Hypothetical Data ◽

Moderate Complexity

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.

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System dynamics modeling with fuzzy logic application to mitigate the bullwhip effect in supply chains

Journal of Modelling in Management ◽

10.1108/jm2-04-2018-0045 ◽

2019 ◽

Vol 14 (3) ◽

pp. 610-627 ◽

Cited By ~ 3

Author(s):

Mehdi Poornikoo ◽

Muhammad Azeem Qureshi

Keyword(s):

Fuzzy Logic ◽

Supply Chain ◽

System Dynamics ◽

Dynamic Models ◽

Demand Forecasting ◽

Bullwhip Effect ◽

Automated System ◽

Supply Chain Performance ◽

Inference System ◽

Content Type

Purpose A plethora of studies focused on the cause and solutions for the bullwhip effect, and consequently many have successfully experimented to dampen the effect. However, the feasibility of such studies and the actual contribution for supply chain performance are yet up for debate. This paper aims to fill this gap by providing a holistic system-based perspective and proposes a fuzzy logic decision-making implementation for a single-product, three-echelon and multi-period supply chain system to mitigate such effect. Design/methodology/approach This study uses system dynamics (SD) as the central modeling method for which Vensim® is used as a tool for hybrid simulation. Further, the authors used MATLAB for undertaking fuzzy logic modeling and constructing a fuzzy inference system that is later on incorporated into SD model for interaction with the main supply chain structure. Findings This research illustrated the usefulness of fuzzy estimations based on experts’ linguistically and logically defined parameters instead of relying merely on the traditional demand forecasting based on time series. Despite the increased complexity of the calculations and structure of the fuzzy model, the bullwhip effect has been considerably decreased resulting in an improved supply chain performance. Practical implications This dynamic modeling approach is not only useful in supply chain management but also the model developed for this study can be integrated into a corporate financial planning model. Further, this model enables optimization for an automated system in a company, where decision-makers can adjust the fuzzy variables according to various situations and inventory policies. Originality/value This study presents a systemic approach to deal with uncertainty and vagueness in dynamic models, which might be a major cause in generating the bullwhip effect. For this purpose, the combination between fuzzy set theory and system dynamics is a significant step forward.

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