Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain
The bullwhip effect is defined as the distortion of demand information as one moves upstream in the supply chain, causing severe inefficiencies in the whole supply chain. Although extensive research has been conducted to study the causes of the bullwhip effect and seek mitigation solutions with resp...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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SAGE Publishing
2013-08-01
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| Series: | International Journal of Engineering Business Management |
| Online Access: | https://doi.org/10.5772/56833 |
| _version_ | 1818324753667063808 |
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| author | Francesco Costantino Giulio Di Gravio Ahmed Shaban Massimo Tronci |
| author_facet | Francesco Costantino Giulio Di Gravio Ahmed Shaban Massimo Tronci |
| author_sort | Francesco Costantino |
| collection | DOAJ |
| description | The bullwhip effect is defined as the distortion of demand information as one moves upstream in the supply chain, causing severe inefficiencies in the whole supply chain. Although extensive research has been conducted to study the causes of the bullwhip effect and seek mitigation solutions with respect to several demand processes, less attention has been devoted to the impact of seasonal demand in multi-echelon supply chains. This paper considers a simulation approach to study the effect of demand seasonality on the bullwhip effect and inventory stability in a four-echelon supply chain that adopts a base stock ordering policy with a moving average method. The results show that high seasonality levels reduce the bullwhip effect ratio, inventory variance ratio, and average fill rate to a great extent; especially when the demand noise is low. In contrast, all the performance measures become less sensitive to the seasonality level when the noise is high. This performance indicates that using the ratios to measure seasonal supply chain dynamics is misleading, and that it is better to directly use the variance (without dividing by the demand variance) as the estimates for the bullwhip effect and inventory performance. The results also show that the supply chain performances are highly sensitive to forecasting and safety stock parameters, regardless of the seasonality level. Furthermore, the impact of information sharing quantification shows that all the performance measures are improved regardless of demand seasonality. With information sharing, the bullwhip effect and inventory variance ratios are consistent with average fill rate results. |
| first_indexed | 2024-12-13T11:33:36Z |
| format | Article |
| id | doaj.art-44e7b15940b0428d8a51e0e2d6636870 |
| institution | Directory Open Access Journal |
| issn | 1847-9790 |
| language | English |
| last_indexed | 2024-12-13T11:33:36Z |
| publishDate | 2013-08-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | International Journal of Engineering Business Management |
| spelling | doaj.art-44e7b15940b0428d8a51e0e2d66368702022-12-21T23:47:51ZengSAGE PublishingInternational Journal of Engineering Business Management1847-97902013-08-01510.5772/5683345551Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply ChainFrancesco Costantino0Giulio Di Gravio1Ahmed Shaban2Massimo Tronci3 Department of Mechanical and Aerospace Engineering, University of Rome “La Sapienza”, Rome, Italy Department of Mechanical and Aerospace Engineering, University of Rome “La Sapienza”, Rome, Italy Department of Industrial Engineering, Fayoum University, Fayoum, Egypt Department of Mechanical and Aerospace Engineering, University of Rome “La Sapienza”, Rome, ItalyThe bullwhip effect is defined as the distortion of demand information as one moves upstream in the supply chain, causing severe inefficiencies in the whole supply chain. Although extensive research has been conducted to study the causes of the bullwhip effect and seek mitigation solutions with respect to several demand processes, less attention has been devoted to the impact of seasonal demand in multi-echelon supply chains. This paper considers a simulation approach to study the effect of demand seasonality on the bullwhip effect and inventory stability in a four-echelon supply chain that adopts a base stock ordering policy with a moving average method. The results show that high seasonality levels reduce the bullwhip effect ratio, inventory variance ratio, and average fill rate to a great extent; especially when the demand noise is low. In contrast, all the performance measures become less sensitive to the seasonality level when the noise is high. This performance indicates that using the ratios to measure seasonal supply chain dynamics is misleading, and that it is better to directly use the variance (without dividing by the demand variance) as the estimates for the bullwhip effect and inventory performance. The results also show that the supply chain performances are highly sensitive to forecasting and safety stock parameters, regardless of the seasonality level. Furthermore, the impact of information sharing quantification shows that all the performance measures are improved regardless of demand seasonality. With information sharing, the bullwhip effect and inventory variance ratios are consistent with average fill rate results.https://doi.org/10.5772/56833 |
| spellingShingle | Francesco Costantino Giulio Di Gravio Ahmed Shaban Massimo Tronci Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain International Journal of Engineering Business Management |
| title | Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain |
| title_full | Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain |
| title_fullStr | Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain |
| title_full_unstemmed | Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain |
| title_short | Exploring the Bullwhip Effect and Inventory Stability in a Seasonal Supply Chain |
| title_sort | exploring the bullwhip effect and inventory stability in a seasonal supply chain |
| url | https://doi.org/10.5772/56833 |
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