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An Analytical Investigation of the Bullwhip Effect
Author(s) -
Warburton Roger D. H.
Publication year - 2004
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2004.tb00151.x
Subject(s) - bullwhip effect , supply chain , variety (cybernetics) , computer science , order (exchange) , differential (mechanical device) , lost sales , inventory control , supply chain management , mathematical optimization , economics , operations research , mathematics , business , physics , marketing , thermodynamics , finance , artificial intelligence
The Bullwhip Effect is problematic: order variability increases as orders propagate along the supply chain. The fundamental differential delay equations for a retailer's inventory reacting to a surge in demand are solved exactly. Much of the rich and complex inventory behavior is determined by the replenishment delay. The analytical solutions agree with numerical integrations and previous control theory results. Managerially useful ordering strategies are proposed. Exact expressions are derived for the retailer's orders to the manufacturer, and the Bullwhip Effect arises naturally. The approach is quite general and applicable to a wide variety of supply chain problems.