Vidal's library
Title: 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