Research On Formation Mechanism Of Bullwhip Effect And Their Control Strategies

Improving the supply chain performance and achieving agility in supply chain management,namely, quick and high-quality response to demands, increasing products variety, reducing productlife cycle etc, become essential to enterprises. To a certain extent, the supply chain managementdetermines the final success of enterprises. The Bullwhip Effect (or Whiplash Effect) has beenrecognized as one of the most problematic issues to be faced in supply chain management. It not onlyindicates the vulnerability of supply chain system to external interference, especially the demandfluctuations, but also imposes great human, financial and resource burden on supply chain participants.It is clear that studying the endogenous dynamical mechanism and dynamical characteristics ofbullwhip effect will not only improve our understanding of supply chain operations but also providesome theoretical basis for policy making. This paper studies the bullwhip effect problem from theviewpoint of supply chain networks and focuses on the formation mechanism of bullwhip effect andtheir dynamic control strategies. The main research work includes:(1) Identifying the factors contributing to bullwhip effect in supply chain networks. First, thevarious social, economical, cultural influences that contribute to bullwhip effect are analyzed.According to the impact strength of these factors on bullwhip effect and the relationship betweenthem, the key factors are identified and their mode of actions and effect on supply chain performanceare studied. These make preparations for the supply chain inventory network model construction.(2) Analyzing the uncertainties in bullwhip effect. The main uncertaint factors of bullwhip effectare identified and classified according to their relationship between each other and their effect on thesupply chain system. These uncertain factors are descriped in mathematical variable forms in thesupply chain inventory network model construction. This paper mainly focuses on the uncertainfactors of market demand, information transmission, production process, supply chain systemstructure, inventory policy implementation and lead time delays. These uncertainties also playimportant role in the bullwhip effect control policy making.(3) Supply chain inventory networks system modeling. Applying the structured method, the systemstate transition models of supply chain inventory networks are built, which contain the levels ofdemand, supply and manufacturing. Based on these system models, the various certain factors anduncertain factors of bullwhip effect in supply chain systems are analyzed. Firstly, on the level ofsupply chain network node enterprises, the effect of uncertainties of demand, production capacity,lead time delays and the supply chain network structure on bullwhip effect is analyzed. Secondly, on the whole supply chain system level, considering the relationship between supply chain members andtheir management polices, the endogenous dynamical mechanism and dynamical characteristics ofbullwhip effect are descriped using mathematical models.(4) Analyzing the effect of uncertainties on bullwhip effect in supply chains. Firstly, themeasurement of bullwhip effect based on the inventory position fluctuations is proposed. Then, theeffect of uncertainties on bullwhip effect is studied, which includes the inventory management, theinformation transmission and sharing, risk prediction and management, ordering sensitivity analysis,and so on. Methods used in this study include the system dynamics analyzing and mathematicalreasoning.(5) Inventory control strategies and policies that aim to reduce the bullwhip effect are proposed.Based on the endogenous dynamical mechanism and dynamical characteristics of bullwhip effect insupply chain networks, the strategies and control methods of bullwhip effect are designed, whichmainly focuse on the major causes of inventory position fluctuations, such as the limited informationsharing, the change of supply chain topology and the capacity to respond to market demand changes.Further, simulation studies are carried out, which shows the effect of the inventory control methodsdesigned in this study on reducing the bullwhip effect and improving supply chain performance.These provide new methods for supply chain managers, allowing them to find the weak links insupply chains, design better inventory control strategy and improve SC performance.