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Supply chain network design with the presence of the bullwhip effect

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  • Darmawan, Agus
  • Wong, Hartanto Wijaya
  • Fransoo, Jan

Abstract

This paper presents a modeling framework that integrates facility location-allocation and inventory control decisions, accounting for the potential presence of the bullwhip effect. Since incorporating the bullwhip effect adds complexity to the optimization problem, we apply linearization and approximation techniques in our solution approach. Through numerical experiments, we assess how the bullwhip effect influences optimal network design, focusing on various design parameters. The results suggest that the bullwhip effect can significantly influence network design, with lead time playing a particularly critical role in differentiating designs for supply chains with and without the bullwhip effect. Additionally, through a simulation study, we explore how incorporating the bullwhip effect may affect the resilience of supply chain networks when facing supply disruptions.

Suggested Citation

  • Darmawan, Agus & Wong, Hartanto Wijaya & Fransoo, Jan, 2025. "Supply chain network design with the presence of the bullwhip effect," International Journal of Production Economics, Elsevier, vol. 286(C).
    • Handle: RePEc:eee:proeco:v:286:y:2025:i:c:s0925527325001537
    DOI: 10.1016/j.ijpe.2025.109668
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