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Returns and the bullwhip effect

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  • Chatfield, Dean C.
  • Pritchard, Alan M.

Abstract

An almost universal assumption in the bullwhip effect modeling literature is that excess goods may be returned without restriction. We seek to determine if returns impact the level of bullwhip effect observed in a multi-stage supply chain. We build a hybrid agent/discrete-event simulation model of a supply chain and execute it under various conditions of demand variance, lead-time variance, information sharing, and return allowance. We find that permitting returns significantly increases the bullwhip effect. As a result, applying models that assume returns are permitted will systematically overestimate the bullwhip effect for supply chains that restrict returns.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transe:v:49:y:2013:i:1:p:159-175
    DOI: 10.1016/j.tre.2012.08.004
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    Cited by:

    1. Nowak, Thomas & Hofer, Vera, 2014. "On stabilizing volatile product returns," European Journal of Operational Research, Elsevier, vol. 234(3), pages 701-708.
    2. Spiegler, Virginia L.M. & Naim, Mohamed M. & Towill, Denis R. & Wikner, Joakim, 2016. "A technique to develop simplified and linearised models of complex dynamic supply chain systems," European Journal of Operational Research, Elsevier, vol. 251(3), pages 888-903.
    3. Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2015. "On returns and network configuration in supply chain dynamics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 73(C), pages 152-167.
    4. Govindan, Kannan & Soleimani, Hamed & Kannan, Devika, 2015. "Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future," European Journal of Operational Research, Elsevier, vol. 240(3), pages 603-626.
    5. Zhalechian, M. & Tavakkoli-Moghaddam, R. & Zahiri, B. & Mohammadi, M., 2016. "Sustainable design of a closed-loop location-routing-inventory supply chain network under mixed uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 182-214.
    6. repec:eee:transe:v:110:y:2018:i:c:p:122-136 is not listed on IDEAS
    7. 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.
    8. Cannella, Salvatore & Dominguez, Roberto & Framinan, Jose M., 2017. "Inventory record inaccuracy – The impact of structural complexity and lead time variability," Omega, Elsevier, vol. 68(C), pages 123-138.

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    Keywords

    Bullwhip effect; Simulation; Returns; Inventory;

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