Controlling replenishment rule induced bullwhip via good systems design

In “The bullwhip effect in supply chains: A review of methods, components and practical cases”, edited by O.A. Carranza Torres and F. Villegas Morán, Palgrave Macmillan, London, 95-106. ISBN: 978-1-4039-9858-3.

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Abstract

Demand amplification (or bullwhip as it is now popularly called) is not a new phenomenon. Industry typically has to cope with bullwhip measured not just in terms of the 2:1 amplification in orders which is frequently encountered across a single echelon, but sometimes it is as high as 20:1 across the extended enterprise. In this Chapter we consider how bullwhip due to various Forrester effects may be avoided. This leads to our exploitation of a particular Replenishment Rule already widely used in industry and for which analytical formulae for bullwhip generation and inventory variance have been recently derived.