The Study Of Bullwhip Effect Stochastic Risk Decision Based On Utility

The enterprises who want to win in competition with its single strength become impossible on condition with frequent undulation of customer demand, intense market competition and unceasing renewal of technical causes. Implementing supply chain management becomes inevitable. In the developing process of supply chain management, the phenomenon that customer's demand fluctuation gradually enlarged along with supply chain causes to people's attention. Bullwhip effect has become an objective existence phenomenon in supply chain which seriously threatens to the whole supply chain's benefit. Thus, in the practice process of supply chain management we need to regard and execute the risk management.Through a great deal of research paper, the inexact demand information is the development root of bullwhip effect. So many reasons induce demand information deviation, the detention of transfer time and the customer demand fluctuation is the most primary factor. How to obtain the effective forecast demand data from the information which contains deviation is the key factor to reduce the bullwhip effect influence. This paper established a two supplies chain model which contains several retails and one producer, produced its equation of state and the observational equation, handled the demand information with the Kalman filtering and obtained the demand forecast value and the filter forecast variance. Different policy-makers may make different decision when they face with the variance of demand information. Based on such consideration, this paper introduced the policy-maker's utility into the decision-making process and established reflects policy-maker's evaluation criteria decision model which considered the maximal policy-maker's utility as objective function. Through the parameter utility function, we produced expectation utility under the logarithmic function, the linear function, the power function and negative exponent function separately, and then gave out the optimum decision with the trapezoidal integration and the dichotomy.Finally, we used the Monte-Carlo method to carry on the simulation with the demand data, compiled bullwhip effect stochastic decision-making procedure based on Matlab, and then compared demand observation data with forecast data and different parameter utility decision-values. We can see that the undulation of forecast damand after Kalman filtering have been alleviated effectively, the decision-maker with different parameter utility has different risk prejudice degree, these difference ofdecision-making value is notably. Thus, the policy-maker's individual factor is an important factor which cannot be neglected in the controlling process of bullwhip effect.