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Measuring the variability in supply chains with the peakedness

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  • CHEVALIER, Philippe

    ()
    (Université catholique de Louvain, CORE and Louvain School of Management, B-1348 Louvain-la-Neuve, Belgium)

  • VAN DEN SCHRIECK, Jean - CHristophe

    ()
    (Université catholique de Louvain, CORE and Louvain School of Management, B-1348 Louvain-la-Neuve, Belgium)

  • WEI, Ying

    ()
    (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

Abstract

This paper introduces a novel way to measure the variability of order flows in supply chains, the peakedness. The peakedness can be used to measure the variability assuming the order flow is a general point pro- cess. We show basic properties of the peakedness, and demonstrate its computation from real-time continuous demand processes, and cumulative demand collected at fixed time intervals as well. We also show that the peakedness can be used to characterize demand, forecast, and inventory variables, to effectively manage the variability. Our results hold for both single stage and multistage inventory systems, and can further be extended to a tree-structured supply chain with a single supplier and multiple retailers. Furthermore, the peakedness can be applied to study traditional inventory problems such as quantifying bullwhip effects and determining safety stock levels. Finally, a numerical study based on real life Belgian supermarket data verifies the effectiveness of the peakedness for measuring the order flow variability, as well as estimating the bullwhip effects.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010067.

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Date of creation: 01 Oct 2010
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Handle: RePEc:cor:louvco:2010067

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Keywords: variability; peakedness; supply chain;

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