Extenuating Whip-Lash Effect in Multi-Echelon SCM in Steel Processing Industry Using Optimization Model

2016 ◽  
Vol 16 (4) ◽  
Author(s):  
A. Naga Phaneendra ◽  
Diwakar Reddy Vanimireddy ◽  
Krishnaiah Gidda
Keyword(s):  
Supply Chain ◽  
Optimization Model ◽  
Bullwhip Effect ◽  
Demand Forecast ◽  
Holding Costs ◽  
Multiple Products ◽  
Steel Processing ◽  
Simple Exponential Smoothing ◽  
Smoothing Parameters ◽  
Optimal Set

AbstractForecasting of inventory is an enigma to various firms at different echelon levels of supply chain. Abnormality in forecasting an inventory may leads to fluctuations in upstream supply chain. On upswing it can be uneconomical in terms of stock-out cost, while on the down trend it can be expensive in terms of stock holding costs. To amend the firms efficiency, in this paper the model developed by (Akhtar Tanveer et al. An Optimization model for Mitigating Bullwhip-Effect in a Two-Echelon Supply chain. Int conf Traf Transp Stud 2014;138:289-97) is successfully applied to steel processing firm to mitigate the Bull-whip or Whip-lash effect in the supply chain. The objective function is to minimize the variation between the actual order quantity and demand forecast of multiple products at various echelons and the simple exponential smoothing is compiled to forecast the demand of products. The model is furthermore validated by an illustration of seven products and it depicts that the model emanates an optimal set of smoothing parameters to attenuate the whip-lash effect.

scholarly journals Alternative Forecasting Techniques that Reduce the Bullwhip Effect in a Supply Chain: A Simulation Study

1970 ◽  
Vol 25 (2) ◽  
pp. 177-188 ◽  
Author(s):  
Francisco Campuzano-Bolarín ◽  
Antonio Guillamón Frutos ◽  
Ma Del Carmen Ruiz Abellón ◽  
Andrej Lisec
Keyword(s):  
Supply Chain ◽  
Moving Average ◽  
Management Strategies ◽  
Demand Forecasting ◽  
Bullwhip Effect ◽  
Good Alternative ◽  
Critical Problems ◽  
Simple Exponential Smoothing ◽  
Demand Patterns ◽  
Forecasting Techniques

The research of the Bullwhip effect has given rise to many papers, aimed at both analysing its causes and correcting it by means of various management strategies because it has been considered as one of the critical problems in a supply chain. This study is dealing with one of its principal causes, demand forecasting. Using different simulated demand patterns, alternative forecasting methods are proposed, that can reduce the Bullwhip effect in a supply chain in comparison to the traditional forecasting techniques (moving average, simple exponential smoothing, and ARMA processes). Our main findings show that kernel regression is a good alternative in order to improve important features in the supply chain, such as the Bullwhip, NSAmp, and FillRate.

Coordinating of multi-echelon supply chains through the generalized (R, S) policy

SIMULATION ◽  
2020 ◽  
Vol 96 (9) ◽  
pp. 767-778 ◽  
Author(s):  
Ahmed Shaban ◽  
Francesco Costantino ◽  
Giulio Di Gravio ◽  
Massimo Tronci
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Information Sharing ◽  
Negative Impact ◽  
Bullwhip Effect ◽  
Coordination Mechanism ◽  
Chain Model ◽  
Demand Forecast ◽  
Modeling Methodology ◽  
Information Demand

Numerous studies have confirmed the negative impact of the lack of coordination on supply chain performance. In particular, the lack of coordination leads to the bullwhip effect, which has severe impacts on supply chain stability. This paper evaluates a proposed coordination mechanism that allows a decentralized information sharing in multi-echelon supply chains. The proposed mechanism “Info-Smooth” utilizes the ordering rule of the generalized (R, S) policy in which a replenishment order can be transferred to upstream echelons including two pieces of information (demand forecast and inventory balance). As the generalized (R, S) can allow order smoothing, Info-Smooth combines the power of both information sharing and order smoothing. A simulation modeling methodology is employed to investigate the effectiveness of Info-Smooth in a multi-echelon supply chain. The factorial design results have shown that Info-Smooth is successful in mitigating the bullwhip effect whilst keeping acceptable inventory stability, compared to the traditional supply chain model.

scholarly journals Analysis of Variance Amplification and Service Level in a Supply Chain with Correlated Demand

2020 ◽  
Vol 12 (16) ◽  
pp. 6470 ◽  
Author(s):  
Ahmed Shaban ◽  
Mohamed A. Shalaby ◽  
Giulio Di Gravio ◽  
Riccardo Patriarca
Keyword(s):  
Supply Chain ◽  
Performance Measures ◽  
Bullwhip Effect ◽  
Service Level ◽  
Operating Conditions ◽  
Supply Chain Performance ◽  
Chain Model ◽  
Ordering Policy ◽  
Smoothing Parameters ◽  
The Impact

The bullwhip effect reflects the variance amplification of demand as they are moving upstream in a supply chain, and leading to the distortion of demand information that hinders supply chain performance sustainability. Extensive research has been undertaken to model, measure, and analyze the bullwhip effect while assuming stationary independent and identically distributed (i.i.d) demand, employing the classical order-up-to (OUT) policy and allowing return orders. On the contrary, correlated demand where a period’s demand is related to previous periods’ demands is evident in several real-life situations, such as demand patterns that exhibit trends or seasonality. This paper assumes correlated demand and aims to investigate the order variance ratio (OVR), net stock amplification ratio (NSA), and average fill rate/service level (AFR). Moreover, the impact of correlated demand on the supply chain performance under various operational parameters, such as lead-time, forecasting parameter, and ordering policy parameters, is analyzed. A simulation modeling approach is adopted to analyze the response of a single-echelon supply chain model that restricts return orders and faces a first order autoregressive demand process AR(1). A generalized order-up-to policy that allows order smoothing through the proper tuning of its smoothing parameters is applied. The characterization results confirm that the correlated demand affects the three performance measures and interacts with the operating conditions. The results also indicate that the generalized OUT inventory policy should be adopted with the correlated demand, as its smoothing parameters can be adapted to utilize the demand characteristics such that OVR and NSA can be reduced without affecting the service level (AFR), implying sustainable supply chain operations. Furthermore, the results of a factorial design have confirmed that the ordering policy parameters and their interactions have the largest impact on the three performance measures. Based on the above characterization, the paper provides management with means to sustain good performance of a supply chain whenever a correlated demand pattern is realized through selecting the control parameters that decrease the bullwhip effect.

The Bullwhip Effect in Supply Chain and Countermeasures

2013 ◽  
Vol 711 ◽  
pp. 799-804 ◽  
Author(s):  
Yu Fang Chao
Keyword(s):  
Supply Chain ◽  
Information Sharing ◽  
Supply And Demand ◽  
Bullwhip Effect ◽  
Market Demand ◽  
Strategic Partnerships ◽  
Wide Spread ◽  
Demand Forecast ◽  
Demand Fluctuations ◽  
The Competitiveness Of Enterprises

As supply chain involves a wide spread of enterprises, it is inevitable to have a bullwhip effect. The reason, why bullwhip effect occurs, includes such factors as demand forecast, delay in delivery, bulk orders and others. Bullwhip effect results increased inventory, differences in supply and demand, posing great risks on enterprise operation. To reducing the bullwhip effect in supply chains, such strategies as establishing an information-sharing platform, establishing strategic partnerships, direct ship and transit, stabling market demand fluctuations, should be taken, which will improve the competitiveness of enterprises in supply chain.

Effects of Vendor-Managed Inventory on the Bullwhip Effect

2011 ◽  
Vol 4 (3) ◽  
pp. 1-17 ◽  
Author(s):  
Susanne Hohmann ◽  
Stephan Zelewski
Keyword(s):  
Supply Chain ◽  
Nonlinear Optimization ◽  
Optimization Model ◽  
Collaborative Planning ◽  
Bullwhip Effect ◽  
Vendor Managed Inventory ◽  
Demand Variability

The bullwhip effect means that demand variability increases as one moves up the supply chain. In the following article the bullwhip effect is quantified for each part of the supply chain which is presupposed to consist of a producer, a wholesaler, a retailer, and a consumer. After considering the causes of the bullwhip effect, it will be shown with the help of a nonlinear optimization model to what extent the bullwhip effect can be reduced using vendor-managed inventory (VMI) as one concept of Collaborative Planning, Forecasting and Replenishment (CPFR). In contrast to other studies in this field the reduction of the bullwhip effect will be accurately quantified for each part of the supply chain.

scholarly journals A multi-period and multi-product optimizer for cooperative supply chains

2012 ◽  
Vol 43 (1) ◽  
pp. 77-92 ◽  
Author(s):  
M. Sepehri ◽  
K. Fayazbakhsh
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Minimum Cost ◽  
Bullwhip Effect ◽  
Coordination Mechanism ◽  
Holding Costs ◽  
Multi Stage ◽  
Long Run ◽  
Operational Information ◽  
Supply Chain Simulation

Members in a traditional supply chain compete to reduce their individual costs. But total cost is minimized in a cooperative, or a corporate managed, supply chain. A lower average cost and a lower cost variation are achieved by cooperative individual members in the long-run. The problem is formulated and solved as an integrated flow network. Previous research is expanded to include multi-period and multi-product cooperative supply chain with possibility of holding inventory in a multi-stage, multi-member setup. A Cooperative Supply Optimizer System (CSOS), a software-based coordination mechanism, is developed for large chains. It gathers operational information from members of the supply chain, and then guides them on ordering decisions for a minimum cost of the entire supply chain. Simulation results indicate an approximately 26% reduction in total supply chain costs, utilizing this formulation over a competitive setup. As the holding costs increase, the problem decomposes into single period (Just-in-time) again. The disturbing bullwhip effect disappears in cooperative supply chains.

scholarly journals Analisis bullwhip effect dalam sistem rantai pasok pada produk Abon dan Dendeng Sapi Asri

2021 ◽  
Vol 13 (2) ◽  
pp. 169
Author(s):  
Indra Kusumajati Susanto ◽  
RR. Rieka F Hutami
Keyword(s):  
Supply Chain ◽  
Qualitative Methods ◽  
Quantitative Methods ◽  
Forecast Error ◽  
Secondary Data ◽  
Bullwhip Effect ◽  
Primary Data ◽  
Demand Forecast ◽  
Root Cause ◽  
Operational Management

One of the obstacles facing micro, small and medium-sized enterprises (MSMEs) in Indonesia is the bullwhip effect. The bullwhip effect is an event that occurs in the supply chain due to an increase in order fluctuations or order cancellations due to information distortions. This study aims to determine the value of the bullwhip effect and explain the main causes of its occurrence in order to explain about the approach to reducing the bullwhip effect in micro, small and medium-sized enterprises (MSMEs) in Indonesia that operational management can be maximized through operational management. This study uses quantitative methods to determine the value of the bullwhip effect. And qualitative methods are used to identify the root cause and reduction of the bullwhip effect. With primary data from interviews. In addition, secondary data comes from demand data and order data on products for distributors and retailers managed by the company. The results showed that the value of the bullwhip effect on the product at one of the micro, small and medium-sized enterprises (MSMEs) in Indonesia was almost completely above 1.00 and above the specified parameters. This provides information that there is a product bullwhip effect in one of the micro, small and medium-sized enterprises (MSMEs) in Indonesia. Meanwhile, the main cause of the bullwhip effect in one of the smallest, small and medium-sized enterprises (MSMEs) in Indonesia is a demand forecast error. 

Effects of Vendor-Managed Inventory on the Bullwhip Effect

2013 ◽  
pp. 167-183 ◽  
Author(s):  
Susanne Hohmann ◽  
Stephan Zelewski
Keyword(s):  
Supply Chain ◽  
Nonlinear Optimization ◽  
Optimization Model ◽  
Collaborative Planning ◽  
Bullwhip Effect ◽  
Vendor Managed Inventory ◽  
Demand Variability

The bullwhip effect means that demand variability increases as one moves up the supply chain. In the following article the bullwhip effect is quantified for each part of the supply chain which is presupposed to consist of a producer, a wholesaler, a retailer, and a consumer. After considering the causes of the bullwhip effect, it will be shown with the help of a nonlinear optimization model to what extent the bullwhip effect can be reduced using vendor-managed inventory (VMI) as one concept of Collaborative Planning, Forecasting and Replenishment (CPFR). In contrast to other studies in this field the reduction of the bullwhip effect will be accurately quantified for each part of the supply chain.

Testing the Potential of RFID to Increase Supply-Chain Agility and to Mitigate the Bullwhip Effect

2012 ◽  
pp. 49-68
Author(s):  
Anthony Vance ◽  
Paul Benjamin Lowry ◽  
Jeffrey A. Ogden
Keyword(s):  
Supply Chain ◽  
Empirical Evidence ◽  
Bullwhip Effect ◽  
Inventory Level ◽  
Rfid Technology ◽  
Holding Costs ◽  
Business Agility ◽  
Supply Chain Agility ◽  
Inventory Holding ◽  
Stockout Costs

This study examines the potential of RFID technology to increase the agility of supply-chain e-commerce systems by mitigating the bullwhip effect. The bullwhip effect is a supply-chain phenomenon that reveals a lack of business agility characterized by the amplification of inventory variance. This study employs an experiment involving a modified Beer Distribution Game to simulate an RFID-enabled supply chain. The results provide empirical evidence that RFID technology can increase a supply chain’s agility and reduce the bullwhip effect by reducing inventory holding costs, stockout costs, and inventory-level variances. The results are all the more important when applied to interorganizational e-commerce systems.

Testing the Potential of RFID to Increase Supply-Chain Agility and to Mitigate the Bullwhip Effect

2010 ◽  
Vol 1 (1) ◽  
pp. 48-66 ◽  
Author(s):  
Anthony Vance ◽  
Paul Benjamin Lowry ◽  
Jeffrey A. Ogden
Keyword(s):  
Supply Chain ◽  
Empirical Evidence ◽  
Bullwhip Effect ◽  
Inventory Level ◽  
Rfid Technology ◽  
Holding Costs ◽  
Business Agility ◽  
Supply Chain Agility ◽  
Inventory Holding

This study examines the potential of RFID technology to increase the agility of supply-chain e-commerce systems by mitigating the bullwhip effect. The bullwhip effect is a supply-chain phenomenon that reveals a lack of business agility characterized by the amplification of inventory variance. This study employs an experiment involving a modified Beer Distribution Game to simulate an RFID-enabled supply chain. The results provide empirical evidence that RFID technology can increase a supply chain’s agility and reduce the bullwhip effect by reducing inventory holding costs, stock out costs, and inventory-level variances. The results are all the more important when applied to interorganizational e-commerce systems.

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