Vidal's libraryTitle: | Information Sharing as a Coordination Mechanism for Reducing the Bullwhip Effect in a Supply Chain |
Author: | Thierry Moyaux, Brahim Chaib-draa, and Sophie D'Amours |
Journal: | IEEE Transactions on Systems, Man and Cybernetics, Part C: Applications and Reviews |
Volume: | 37 |
Number: | 3 |
Pages: | 396--409 |
Year: | 2007 |
DOI: | 10.1109/TSMCC.2006.887014 |
Abstract: | The bullwhip effect is an amplification of the variability of the orders placed by companies in a supply chain. This variability reduces the efficiency of supply chains, since it incurs costs due to higher inventory levels and supply chain agility reduction. Eliminating the bullwhip effect is surely simple; every company just has to order following the market demand, i.e., each company should use a lot-for-lot type of ordering policy. However, many reasons, such as inventory management, lot-sizing, and market, supply, or operation uncertainties, motivate companies not to use this strategy. Therefore, the bullwhip effect cannot be totally eliminated. However, it can be reduced by information sharing, which is the form of collaboration considered in this paper. More precisely, we study how to separate demand into original demand and adjustments. We describe two principles explaining how to use the shared information to reduce the amplification of order variability induced by lead times, which we propose as a cause of the effect. Simulations confirm the value of these two principles with regard to costs and customer service levels. |
@Article{moyaux07a,
author = {Thierry Moyaux and Brahim Chaib-draa and Sophie
D'Amours},
title = {Information Sharing as a Coordination Mechanism for
Reducing the Bullwhip Effect in a Supply Chain},
journal = {{IEEE} Transactions on Systems, Man and Cybernetics,
Part C: Applications and Reviews},
year = 2007,
volume = 37,
number = 3,
pages = {396--409},
abstract = {The bullwhip effect is an amplification of the
variability of the orders placed by companies in a
supply chain. This variability reduces the
efficiency of supply chains, since it incurs costs
due to higher inventory levels and supply chain
agility reduction. Eliminating the bullwhip effect
is surely simple; every company just has to order
following the market demand, i.e., each company
should use a lot-for-lot type of ordering
policy. However, many reasons, such as inventory
management, lot-sizing, and market, supply, or
operation uncertainties, motivate companies not to
use this strategy. Therefore, the bullwhip effect
cannot be totally eliminated. However, it can be
reduced by information sharing, which is the form of
collaboration considered in this paper. More
precisely, we study how to separate demand into
original demand and adjustments. We describe two
principles explaining how to use the shared
information to reduce the amplification of order
variability induced by lead times, which we propose
as a cause of the effect. Simulations confirm the
value of these two principles with regard to costs
and customer service levels.},
url = {http://jmvidal.cse.sc.edu/library/moyaux07a.pdf},
doi = {10.1109/TSMCC.2006.887014},
keywords = {supply-chain complexity}
}
Last modified: Wed Mar 9 10:16:48 EST 2011