Analysis and Verification of Bullwhip Effect Based on System Dynamics

2013 ◽  
Vol 340 ◽  
pp. 312-319
Author(s):  
Fu Xin Yang ◽  
Bai Lan Zhang ◽  
Zhi Yuan Su
Keyword(s):  
Supply Chain ◽  
System Dynamics ◽  
Correlation Coefficient ◽  
Lead Time ◽  
Process Model ◽  
Autoregressive Process ◽  
Bullwhip Effect ◽  
Simulation Software ◽  
Simulation Results ◽  
The Impact

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.

scholarly journals Impact of Price-Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

2022 ◽  
Vol 15 (1) ◽  
pp. 1-24
Author(s):  
Mona Verma ◽  
Reena Jain ◽  
Chandra K. Jaggi
Keyword(s):  
Supply Chain ◽  
Numerical Analysis ◽  
Lead Time ◽  
Bullwhip Effect ◽  
Capacity Constraints ◽  
Price Variation ◽  
Payment Scheme ◽  
Premium Payment ◽  
The Impact

Bullwhip effect reduces the efficiency, responsiveness, and value of the supply chain. There are some indirect causes like lead time, the number of echelons, and some direct causes of bullwhip effect such as rationing or price variation. Due to capacity constraints, retailers are forced to experience rationing of their demands. Fear of rationing usually gives rise to manipulable demand and hence increases the bullwhip effect. Moreover, if the retailer’s demand is price sensitive then it will cause price variation. The offerings of premium payment by retailers due to unfulfilled demand lure the supplier to extend his existing capacity and to allocate them more supply. In this paper, an attempt has been made to mitigate the impact of the bullwhip effect using a premium payment scheme. A technique has been coined that will help in reducing the bullwhip effect. The increased value of the supply chain on using a premium payment scheme is proof of the reduction of the bullwhip effect. Results are validated through numerical analysis.

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

2013 ◽  
Vol 295-298 ◽  
pp. 3310-3317 ◽  
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.

scholarly journals Impact of Price Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

2022 ◽  
Vol 15 (1) ◽  
pp. 0-0
Keyword(s):  
Supply Chain ◽  
Numerical Analysis ◽  
Lead Time ◽  
Bullwhip Effect ◽  
Capacity Constraints ◽  
Price Variation ◽  
Payment Scheme ◽  
Premium Payment ◽  
The Impact

Bullwhip effect reduces the efficiency, responsiveness, and value of the supply chain. There are some indirect causes like lead time, the number of echelons, and some direct causes of bullwhip effect such as rationing or price variation. Due to capacity constraints, retailers are forced to experience rationing of their demands. Fear of rationing usually gives rise to manipulable demand and hence increases the bullwhip effect. Moreover, if the retailer’s demand is price sensitive then it will cause price variation. The offerings of premium payment by retailers due to unfulfilled demand lure the supplier to extend his existing capacity and to allocate them more supply. In this paper, an attempt has been made to mitigate the impact of the bullwhip effect using a premium payment scheme. A technique has been coined that will help in reducing the bullwhip effect. The increased value of the supply chain on using a premium payment scheme is proof of the reduction of the bullwhip effect. Results are validated through numerical analysis.

Some Simulation Results on Bullwhip Effect in Supply Chain with Several Dealers

2013 ◽  
Vol 774-776 ◽  
pp. 1979-1986
Author(s):  
Shin Sc Woo ◽  
Ya Hui Li ◽  
Xi Feng Lu ◽  
Yu Quan Du
Keyword(s):  
Supply Chain ◽  
System Dynamics ◽  
Dynamic Simulation ◽  
Bullwhip Effect ◽  
Experimental Results ◽  
Chain Model ◽  
Supply Chain Model ◽  
Simulation Results

In order to discuss the bullwhip effect in the supply chain with several dealers, a four-level supply chain model is developed based on system dynamics. Through the use of dynamic simulation, the bullwhip effect was evaluated based on several factors such as return proportion, direct utilization proportion of recycling products and sales plan of each dealer. Experimental results show that a higher return proportion and a more direct utilization of recycled products can mitigate the bullwhip effect. Moreover, different sales plan of each dealer has various degrees of influence on the bullwhip effect.

scholarly journals A Discrete Event Simulation Analysis of the Bullwhip Effect in a Multi-Product and Multi-Echelon Supply Chain of Fast Moving Consumer Goods

2020 ◽  
pp. 561-576
Author(s):  
Ramsha Ali ◽  
Ruzelan Khalid ◽  
Shahzad Qaiser
Keyword(s):  
Supply Chain ◽  
Information Sharing ◽  
Discrete Event Simulation ◽  
Fast Moving ◽  
Lead Time ◽  
Discrete Event ◽  
Bullwhip Effect ◽  
Event Simulation ◽  
Stochastic Lead Time ◽  
The Impact

Timely delivery is the major issue in Fast Moving Consumer Good (FMCG) since it depends on the lead time which is stochastic and long due to several reasons; e.g., delay in processing orders and transportation. Stochastic lead time can cause inventory inaccuracy where echelons have to keep high product stocks. Such performance inefficiency reflects the existence of the bullwhip effect (BWE), which is a common challenge in supply chain networks. Thus, this paper studies the impact of stochastic lead time on the BWE in a multi-product and multi-echelon supply chain of FMCG industries under two information-sharing strategies; i.e., decentralized and centralized. The impact was measured using a discrete event simulation approach, where a simulation model of a four-tier supply chain whose echelons adopt the same lead time distribution and continuous review inventory policy was developed and simulated. Different lead time cases under the information-sharing strategies were experimented and the BWE was measured using the standard deviation of demand ratios between echelons. The results show that the BWE cannot be eliminated but can be reduced under centralized information sharing. All the research analyses help the practitioners in FMCG industries get insight into the impact of sharing demand information on the performance of a supply chain when lead time is stochastic.

Investigating the impact of inventory inaccuracy on the bullwhip effect in RFID-enabled supply chains using colored petri nets

2019 ◽  
Vol 14 (2) ◽  
pp. 360-384 ◽  
Author(s):  
Maria Drakaki ◽  
Panagiotis Tzionas
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Petri Nets ◽  
Information Sharing ◽  
Bullwhip Effect ◽  
Colored Petri Nets ◽  
Content Type ◽  
Multi Stage ◽  
The Impact ◽  
Serial Supply Chains

PurposeInformation distortion results in demand variance amplification in upstream supply chain members, known as the bullwhip effect, and inventory inaccuracy in the inventory records. As inventory inaccuracy contributes to the bullwhip effect, the purpose of this paper is to investigate the impact of inventory inaccuracy on the bullwhip effect in radio-frequency identification (RFID)-enabled supply chains and, in this context, to evaluate supply chain performance because of the RFID technology.Design/methodology/approachA simulation modeling method based on hierarchical timed colored petri nets is presented to model inventory management in multi-stage serial supply chains subject to inventory inaccuracy for various traditional and information sharing configurations in the presence and absence of RFID. Validation of the method is done by comparing results obtained for the bullwhip effect with published literature results.FindingsThe bullwhip effect is increased in RFID-enabled multi-stage serial supply chains subject to inventory inaccuracy. The information sharing supply chain is more sensitive to the impact of inventory inaccuracy.Research limitations/implicationsInformation sharing involves collaboration in market demand and inventory inaccuracy, whereas RFID is implemented by all echelons. To obtain the full benefits of RFID adoption and collaboration, different collaboration strategies should be investigated.Originality/valueColored petri nets simulation modeling of the inventory management process is a novel approach to study supply chain dynamics. In the context of inventory errors, information on RFID impact on the dynamic behavior of multi-stage serial supply chains is provided.

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