IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v310y2022i1d10.1007_s10479-021-04136-7.html
   My bibliography  Save this article

Measuring and eliminating the bullwhip in closed loop supply chains using control theory and Internet of Things

Author

Listed:
  • Christos I. Papanagnou

    (University of Salford)

Abstract

Closed-loop supply chains are complex systems as they involve the seamless backward and forward flow of products and information. With the advent of e-commerce and online shopping, there has been a growing interest in product returns and the associated impact on inventory variance and the bullwhip effect. In this paper, a novel four-echelon closed-loop supply chain model is presented, where base-stock replenishment policies are modelled by means of a proportional controller. A stochastic state-space model is implemented, initially to capture the supply chain dynamics while the model is analysed under stationarity conditions with the aid of a covariance matrix. This allows the bullwhip effect to be expressed as a function of replenishment policies and product return rates. Next, an optimisation method is introduced to study the impact of the Internet of Things on inventory variance and the bullwhip effect. The results show that the Internet of Things can reduce costs associated with inventory fluctuations and eliminate the bullwhip effect in closed-loop supply chains.

Suggested Citation

  • Christos I. Papanagnou, 2022. "Measuring and eliminating the bullwhip in closed loop supply chains using control theory and Internet of Things," Annals of Operations Research, Springer, vol. 310(1), pages 153-170, March.
    • Handle: RePEc:spr:annopr:v:310:y:2022:i:1:d:10.1007_s10479-021-04136-7
    DOI: 10.1007/s10479-021-04136-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-021-04136-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-021-04136-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Riddalls, C. E. & Bennett, S., 2001. "The optimal control of batched production and its effect on demand amplification," International Journal of Production Economics, Elsevier, vol. 72(2), pages 159-168, July.
    2. Wenyan Zhou & Oliver Hinz & Alexander Benlian, 2018. "The impact of the package opening process on product returns," Business Research, Springer;German Academic Association for Business Research, vol. 11(2), pages 279-308, September.
    3. Zhou, Li & Naim, Mohamed M. & Disney, Stephen M., 2017. "The impact of product returns and remanufacturing uncertainties on the dynamic performance of a multi-echelon closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 487-502.
    4. Benjamin T. Hazen & Diane A. Mollenkopf & Yacan Wang, 2017. "Remanufacturing for the Circular Economy: An Examination of Consumer Switching Behavior," Business Strategy and the Environment, Wiley Blackwell, vol. 26(4), pages 451-464, May.
    5. Turan PAKSOY & Ýsmail KARAOÐLAN & Hadi GÖKÇEN & Panos M. PARDALOS & Belkýs TORÐUL, 2016. "An Experimental Research on Closed Loop Supply Chain Management with Internet of Things," Journal of Economics Bibliography, KSP Journals, vol. 3(1S), pages 1-20, April.
    6. Adenso-Díaz, Belarmino & Moreno, Plácido & Gutiérrez, Ester & Lozano, Sebastián, 2012. "An analysis of the main factors affecting bullwhip in reverse supply chains," International Journal of Production Economics, Elsevier, vol. 135(2), pages 917-928.
    7. Dejonckheere, J. & Disney, S. M. & Lambrecht, M. R. & Towill, D. R., 2003. "Measuring and avoiding the bullwhip effect: A control theoretic approach," European Journal of Operational Research, Elsevier, vol. 147(3), pages 567-590, June.
    8. Ponte, Borja & Framinan, Jose M. & Cannella, Salvatore & Dominguez, Roberto, 2020. "Quantifying the Bullwhip Effect in closed-loop supply chains: The interplay of information transparencies, return rates, and lead times," International Journal of Production Economics, Elsevier, vol. 230(C).
    9. Sajjad Aslani Khiavi & Hamid Khaloozadeh & Fahimeh Soltanian, 2019. "Nonlinear modeling and performance analysis of a closed-loop supply chain in the presence of stochastic noise," Mathematical and Computer Modelling of Dynamical Systems, Taylor & Francis Journals, vol. 25(5), pages 499-521, September.
    10. Ketzenberg, Michael, 2009. "The value of information in a capacitated closed loop supply chain," European Journal of Operational Research, Elsevier, vol. 198(2), pages 491-503, October.
    11. Cannella, Salvatore & Bruccoleri, Manfredi & Framinan, Jose M., 2016. "Closed-loop supply chains: What reverse logistics factors influence performance?," International Journal of Production Economics, Elsevier, vol. 175(C), pages 35-49.
    12. Pietro Giovanni, 2017. "Closed-loop supply chain coordination through incentives with asymmetric information," Annals of Operations Research, Springer, vol. 253(1), pages 133-167, June.
    13. Hosoda, Takamichi & Disney, Stephen M. & Gavirneni, Srinagesh, 2015. "The impact of information sharing, random yield, correlation, and lead times in closed loop supply chains," European Journal of Operational Research, Elsevier, vol. 246(3), pages 827-836.
    14. Chang Fang & Xinbao Liu & Jun Pei & Wenjuan Fan & Panos M. Pardalos, 2016. "Optimal production planning in a hybrid manufacturing and recovering system based on the internet of things with closed loop supply chains," Operational Research, Springer, vol. 16(3), pages 543-577, October.
    15. Junyi Lin & Mohamed M. Naim, 2019. "Why do nonlinearities matter? The repercussions of linear assumptions on the dynamic behaviour of assemble-to-order systems," International Journal of Production Research, Taylor & Francis Journals, vol. 57(20), pages 6424-6451, October.
    16. Chatfield, Dean C. & Pritchard, Alan M., 2013. "Returns and the bullwhip effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 49(1), pages 159-175.
    17. de Brito, Marisa P. & van der Laan, Erwin A., 2009. "Inventory control with product returns: The impact of imperfect information," European Journal of Operational Research, Elsevier, vol. 194(1), pages 85-101, April.
    18. Jing Chen & Peter Bell, 2013. "The impact of customer returns on supply chain decisions under various channel interactions," Annals of Operations Research, Springer, vol. 206(1), pages 59-74, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang, Y. & Lin, J. & Hedenstierna, C.P.T. & Zhou, L., 2023. "The more the better? The impact of the number and location of product recovery options on the system dynamics in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    2. Ponte, Borja & Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2022. "The implications of batching in the bullwhip effect and customer service of closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 244(C).
    3. Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2021. "Remanufacturing configuration in complex supply chains," Omega, Elsevier, vol. 101(C).
    4. Ponte, Borja & Framinan, Jose M. & Cannella, Salvatore & Dominguez, Roberto, 2020. "Quantifying the Bullwhip Effect in closed-loop supply chains: The interplay of information transparencies, return rates, and lead times," International Journal of Production Economics, Elsevier, vol. 230(C).
    5. Lin, Junyi & Zhou, Li & Spiegler, Virginia L.M. & Naim, Mohamed M. & Syntetos, Aris, 2022. "Push or Pull? The impact of ordering policy choice on the dynamics of a hybrid closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 300(1), pages 282-295.
    6. Juan Pedro Sepúlveda-Rojas & Rodrigo Ternero, 2020. "Analysis of the Value of Information and Coordination in a Dyadic Closed Loop Supply Chain," Sustainability, MDPI, vol. 12(20), pages 1-18, October.
    7. Dominguez, Roberto & Cannella, Salvatore & Ponte, Borja & Framinan, Jose M., 2020. "On the dynamics of closed-loop supply chains under remanufacturing lead time variability," Omega, Elsevier, vol. 97(C).
    8. Ponte, Borja & Cannella, Salvatore & Dominguez, Roberto & Naim, Mohamed M. & Syntetos, Aris A., 2021. "Quality grading of returns and the dynamics of remanufacturing," International Journal of Production Economics, Elsevier, vol. 236(C).
    9. María Arquer & Borja Ponte & Raúl Pino, 2022. "Examining the balance between efficiency and resilience in closed-loop supply chains," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(4), pages 1307-1336, December.
    10. Hosoda, Takamichi & Disney, Stephen M. & Zhou, Li, 2021. "The yield rate paradox in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 239(C).
    11. Ponte, Borja & Naim, Mohamed M. & Syntetos, Aris A., 2019. "The value of regulating returns for enhancing the dynamic behaviour of hybrid manufacturing-remanufacturing systems," European Journal of Operational Research, Elsevier, vol. 278(2), pages 629-645.
    12. Nowak, Thomas & Hofer, Vera, 2014. "On stabilizing volatile product returns," European Journal of Operational Research, Elsevier, vol. 234(3), pages 701-708.
    13. Ilkka Ritola & Harold Krikke & Marjolein C.J. Caniëls, 2020. "Learning from Returned Products in a Closed Loop Supply Chain: A Systematic Literature Review," Logistics, MDPI, vol. 4(2), pages 1-13, April.
    14. Lin, Junyi & Huang, Hongfu & Li, Shanshan & Naim, Mohamed M., 2023. "On the dynamics of order pipeline inventory in a nonlinear order-up-to system," International Journal of Production Economics, Elsevier, vol. 266(C).
    15. 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.
    16. Lin, Junyi & Naim, Mohamed M. & Spiegler, Virginia L.M., 2020. "Delivery time dynamics in an assemble-to-order inventory and order based production control system," International Journal of Production Economics, Elsevier, vol. 223(C).
    17. Enrique Holgado de Frutos & Juan R Trapero & Francisco Ramos, 2020. "A literature review on operational decisions applied to collaborative supply chains," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-28, March.
    18. 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.
    19. Yan, Ruiliang & Cao, Zixia, 2017. "Product returns, asymmetric information, and firm performance," International Journal of Production Economics, Elsevier, vol. 185(C), pages 211-222.
    20. Ponte, Borja & Costas, José & Puche, Julio & Pino, Raúl & de la Fuente, David, 2018. "The value of lead time reduction and stabilization: A comparison between traditional and collaborative supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 165-185.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:310:y:2022:i:1:d:10.1007_s10479-021-04136-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.