AUTHORS: Junhai Ma, Binshuo Bao
Download as PDF
ABSTRACT: The bullwhip effect is one of the main problems in supply chain management. The downstream retail price fluctuation is one of the major factors to cause the bullwhip effect. This paper investigates the impact of retail prices variability with a view to probability on the bullwhip effect in a two-echelon supply chain which is composed of one supplier and two retailers. With various probabilities to choose the price, we may simply quantify the relationship between the two prices. The order-up-to inventory policy and the moving average forecasting method are employed respectively by the two retailers. The effects of the price, the probability, the lead time, and the autoregressive coefficient on a bullwhip effect measure are shown finally. And we indentify on which condition the bullwhip effect is lessened based on the price sensitive demands
KEYWORDS: Complex Supply chain, Bullwhip effect, Covariance, Price Game, MA Forecasting Method
REFERENCES:
[1] J.W. Forrester, Industrial dynamics a major breakthrough for decision making,Harvard Business Review, vol.6, no.4, 1958, pp. 37–66.
[2] J.W. Forrester,Industrial Dynamics,MIT Press,Cambridge–Mass–USA,1961.
[3] H.L. Lee,V. Padmanabhan,and S. Whang, Information distortion in a supply chain: the bullwhip effect, Management Science, vol.43, no.4,1997,pp. 546–558.
[4] H.L. Lee,V. Padmanabhan,and S. Whang, Bullwhip effect ina supply chain,Sloan Management Review,vol.38,1997,pp. 93–102.
[5] S.C. Graves, A single-item inventory model for a non-stationary demand process,Manufacturing and Service Operations Management, vol.1,1999,pp. 50–61.
[6] F. Chen, Z. Drezner, J.K. Ryan, and D. SimchiLevi,Quantifying the bullwhip effect in a simple supply chain: the impact of forecasting, lead times, and information,Management Science,vol.46,no.3,2000,pp. 436–443.
[7] F. Chen, J.K. Ryan, and D. Simchi-Levi, The impact of exponential smoothing forecasts on the bullwhip effect,Naval Research Logistics,vol.47,no.4,2000,pp. 269–286.
[8] X. Zhang, The impact of forecasting methods on the bullwhip effect, Naval International Journal of Production Economics,vol.88,no.1,2004,pp. 15–27.
[9] Ertunga C. Ozelkan, Conditions of reverse bullwhip effect in pricing for price-sensitive demand functionsAnn Oper Res,DOI 10.1007/s10479- 008-0444-9,2008.
[10] Ha,A.Y.,Tong,S.L.,and Zhang,H.T., Sharing demand information in competing supply chains with production diseconomies,Management Science,57(3),2011,pp. 566–581.
[11] B. Nepal, A. Murat, and R. Babu Chinnam, The bullwhip effect in capacitated supply chains with consideration for product life-cycle aspects,International Journal of Production Economics,vol.136,no.2,2012,pp. 318–331.
[12] Sanjita Jaipuria,An improved demand forecasting method to reduce bullwhip effect in supply chains,Expert Systems with Applications,doi:10.1016/j.eswa. 09,2013.
[13] J.H. Ma and X.G. Ma,A comparison of bullwhip effect under various forecasting techniques in supply chains with two retailers,Abstract and Applied Analysis,vol.2013, Article ID796384,2013.
[14] Wang, NM,The impact of consumer price forecasting behavior on the bullwhip effect,International Journal of Production Research, DOI: 10.1080/00207543.907513,2014.
[15] Akhtar Tanweer*,An Optimization Model for Mitigating Bullwhip-Effect in a Two-Echelon Supply ChainProcedia-Social and Behavioral Sciences, doi: 10.1016/j.sbspro. 07,2014.
[16] Yan Feng. Quyang, Experimental study on using advance demand information to mitigate the bullwhip effect via decentralized negotiations Transportmetrica B-Transport Dynamics,doi:2(3),2014,pp. 169–187.
[17] D.F. Fu, Quantifying and mitigating the bullwhip effect in a benchmark supply chain system by an extended prediction self-adaptive control ordering policy,Computers and Industrial Engineering,doi:10.1016/j.cie. 12,2014.
[18] J.H. Ma and B.S. Bao, Inherent Complexity Research on the Bullwhip Effect in Supply Chains with Two Retailers: The Impact of Three Forecasting Methods Considering Market Share,Abstract and Applied Analysis,DOI: 10.1155/2014/306907,2014.
[19] Y.G. Ma,Analysis of the bullwhip effect in two parallel supply chains with interacting pricesensitive demandsEuropean Journal of Operational Research,JID: EOR,2015.
[20] Y.R. Duan, Bullwhip effect under substitute productsJournal of Operations Management,doi:10.1016/j.jom. 03,2015.