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Providing a measure for bullwhip effect in a two-product supply chain with exponential smoothing forecasts

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  • Sadeghi, Ahmad

Abstract

In this paper, a two-product and two-echelon supply chain is considered in order to quantify the bullwhip effect. Demands of the products are correlated and are represented by a first order vector autoregressive model. Retailer uses “order up to” ordering policy for replenishment of stocks and utilizes exponential smoothing forecast method to predict demand in lead-time period. According to the mentioned assumptions, an equation is derived for bullwhip effect measurement and then a numerical example is presented for a better perception of the bullwhip effect behavior when the parameters change. A comparison of the bullwhip effect measure has been done when two main forecasting methods i.e. exponential smoothing and moving average are used and empirical results are provided. At last, a cost analysis is conducted based on shortage and holding cost under different bullwhip effect measures.

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  • Sadeghi, Ahmad, 2015. "Providing a measure for bullwhip effect in a two-product supply chain with exponential smoothing forecasts," International Journal of Production Economics, Elsevier, vol. 169(C), pages 44-54.
    • Handle: RePEc:eee:proeco:v:169:y:2015:i:c:p:44-54
    DOI: 10.1016/j.ijpe.2015.07.012
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    Cited by:

    1. Bandaly, Dia & Satir, Ahmet & Shanker, Latha, 2016. "Impact of lead time variability in supply chain risk management," International Journal of Production Economics, Elsevier, vol. 180(C), pages 88-100.
    2. Hosoda, Takamichi & Disney, Stephen M., 2018. "A unified theory of the dynamics of closed-loop supply chains," European Journal of Operational Research, Elsevier, vol. 269(1), pages 313-326.

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