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Mitigating the bullwhip effect by ordering policies and forecasting methods

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  • Wright, David
  • Yuan, Xin

Abstract

The "bullwhip" effect, in which order variability increases as one moves up the supply chain, has been observed in a range of industries, modeled by several authors and various remedies suggested. This paper provides a simulation of the effect of improved forecasting methods, and finds that Holt's and Brown's methods substantially mitigate the bullwhip effect across a range of performance metrics. The end result is to identify ordering policies that perform particularly well in combination with these forecasting methods and indicate how they can be implemented in practice.

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  • Wright, David & Yuan, Xin, 2008. "Mitigating the bullwhip effect by ordering policies and forecasting methods," International Journal of Production Economics, Elsevier, vol. 113(2), pages 587-597, June.
    • Handle: RePEc:eee:proeco:v:113:y:2008:i:2:p:587-597
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    1. Isaksson, Olov H.D. & Seifert, Ralf W., 2016. "Quantifying the bullwhip effect using two-echelon data: A cross-industry empirical investigation," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 311-320.
    2. Cao, Qing & Baker, Jeff & Schniederjans, Dara, 2014. "Bullwhip effect reduction and improved business performance through guanxi: An empirical study," International Journal of Production Economics, Elsevier, vol. 158(C), pages 217-230.
    3. J. Zambujal-Oliveira, 2021. "Supply Chain Innovation Research: A Conceptual Approach of Information Management with Game Theory," Group Decision and Negotiation, Springer, vol. 30(2), pages 377-394, April.
    4. Roberto Dominguez & Salvatore Cannella & Borja Ponte & Jose M. Framinan, 2022. "Information sharing in decentralised supply chains with partial collaboration," Flexible Services and Manufacturing Journal, Springer, vol. 34(2), pages 263-292, June.
    5. Li, Xiaoming, 2008. "Demand evolution in stochastic inventory systems: Riskiness increase," International Journal of Production Economics, Elsevier, vol. 116(2), pages 182-189, December.
    6. de Lima, Daruichi Pereira & Fioriolli, José Carlos & Padula, Antonio Domingos & Pumi, Guilherme, 2018. "The impact of Chinese imports of soybean on port infrastructure in Brazil: A study based on the concept of the “Bullwhip Effect”," Journal of Commodity Markets, Elsevier, vol. 9(C), pages 55-76.
    7. Ciancimino, Elena & Cannella, Salvatore & Bruccoleri, Manfredi & Framinan, Jose M., 2012. "On the Bullwhip Avoidance Phase: The Synchronised Supply Chain," European Journal of Operational Research, Elsevier, vol. 221(1), pages 49-63.
    8. Udenio, Maximiliano & Vatamidou, Eleni & Fransoo, Jan C., 2023. "Exponential smoothing forecasts: Taming the Bullwhip Effect when demand is seasonal," Other publications TiSEM 8fca6329-83b9-4a49-a2aa-e, Tilburg University, School of Economics and Management.
    9. Cannella, Salvatore & Framinan, Jose M. & Bruccoleri, Manfredi & Barbosa-Póvoa, Ana Paula & Relvas, Susana, 2015. "The effect of Inventory Record Inaccuracy in Information Exchange Supply Chains," European Journal of Operational Research, Elsevier, vol. 243(1), pages 120-129.
    10. Chiang, Chung-Yean & Lin, Winston T. & Suresh, Nallan C., 2016. "An empirically-simulated investigation of the impact of demand forecasting on the bullwhip effect: Evidence from U.S. auto industry," International Journal of Production Economics, Elsevier, vol. 177(C), pages 53-65.
    11. Kiyoung Jeong & Jae-Dong Hong, 2019. "The impact of information sharing on bullwhip effect reduction in a supply chain," Journal of Intelligent Manufacturing, Springer, vol. 30(4), pages 1739-1751, April.
    12. K. Devika & A. Jafarian & A. Hassanzadeh & R. Khodaverdi, 2016. "Optimizing of bullwhip effect and net stock amplification in three-echelon supply chains using evolutionary multi-objective metaheuristics," Annals of Operations Research, Springer, vol. 242(2), pages 457-487, July.
    13. Wang, Xun & Disney, Stephen M., 2016. "The bullwhip effect: Progress, trends and directions," European Journal of Operational Research, Elsevier, vol. 250(3), pages 691-701.
    14. Xu, Henry & Koh, Lenny & Parker, David, 2009. "Business processes inter-operation for supply network co-ordination," International Journal of Production Economics, Elsevier, vol. 122(1), pages 188-199, November.
    15. Erkan Bayraktar & Kazim Sari & Ekrem Tatoglu & Selim Zaim & Dursun Delen, 2020. "Assessing the supply chain performance: a causal analysis," Annals of Operations Research, Springer, vol. 287(1), pages 37-60, April.
    16. Dass, Mayukh & Fox, Gavin L., 2011. "A holistic network model for supply chain analysis," International Journal of Production Economics, Elsevier, vol. 131(2), pages 587-594, June.
    17. Xi Gang Yuan & Nan Zhu, 2016. "Bullwhip Effect Analysis in Two-Level Supply Chain Distribution Network Using Different Demand Forecasting Technology," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 33(03), pages 1-23, June.
    18. Ciancimino, Elena & Cannella, Salvatore & Canca Ortiz, José David & Framiñán Torres, José Manuel, 2009. "Análisis multinivel de cadenas de suministros: dos técnicas de resolución del efecto bullwhip // Supply Chain Multi-level Analysis: Two Bullwhip Dampening Approaches," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 8(1), pages 7-28, December.
    19. Ton Hien Duc, Truong & Luong, Huynh Trung & Kim, Yeong-Dae, 2010. "Effect of the third-party warehouse on bullwhip effect and inventory cost in supply chains," International Journal of Production Economics, Elsevier, vol. 124(2), pages 395-407, April.

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