Incorporating demand, orders, lead time, and pricing decisions for reducing bullwhip effect in supply chains

Abstract

The purpose of this paper is to mitigate bullwhip effect (BWE) in a supply chain (SC). Four main contributions are proposed. The first one is to reduce BWE through considering its multiple causes (demand, pricing, ordering, and lead time) simultaneously. The second one is to model demands, orders, and prices dynamically for reducing BWE.Demand and prices have mutual effect on each other dynamically over time. In other words, a time series model is used in a game theory method for finding the optimal prices in an SC. Moreover, the optimal prices are inserted into the time series model for forecasting price sensitive demands and orders in an SC. The third one is to use demand of each entity for forecasting its orders. This leads to drastic reduction in BWE and mean square error (MSE) of the model. The fourth contribution is to use optimal prices instead of forecasted ones for demand forecasting and reducing BWE. Finally, a numerical experiment for the auto parts SC is developed. The results show that analysing joint demand, orders, lead time, and pricing model with calculating the optimal values of prices and lead times leads to the significant reduction in BWE.

Penerapan Metode Distribution Requirement Planning Sebagai Upaya untuk Meminimumkan Bullwhip Effect pada Distributor Minyak Goreng (Studi kasus PT. Surya Mandiri Distribusi)

“…Dalam siklus perdagangan, distributor dituntut untuk melakukan distribusi barang dengan baik agar dapat mencegah kekosongan atau kelebihan stok pada pihak konsumen. Dimana tingkat kepuasan konsumen terhadap pelayanan distributor diukur apabila produk yang di distribusikan tiba tepat waktu, jumlah yang sesuai dan dengan kualitas yang baik [2] [3].…”

The analysis of bullwhip effect in supply chain based on hedging strategy compared with optimal order quantity strategy

“…Gamasaee and Fazel Zarandi [40] investigated the impact of joint demand, orders, lead time and pricing decisions on reducing bullwhip effect. Their paper results show significant reduction in bullwhip effect.…”

Manufacturing and selling tactics for a green supply chain under a green cost sharing and a refund agreement

“…Yoo (2014) explored the connection between a return mechanism and commodity's quality in presence of a decentralized supply network and concluded that improving commodity's quality directly influences the amount of commodity's returns. In addition, there are some researches executed in this area to examine price decisions with different circumstances like Taleizadeh et al (2015b), Dan et al (2016), Jingxian et al (2017), Noori-daryan et al (2018, Mokhlesian and Zegordi (2018), Gamasaee and Fazel Zarandi (2018).…”