Bullwhip Effect Causes Analysis And Simulation In Supply Chain

In supply chain, there are always the phenomena like supply shortage, imbalance between production and transportation, very high inventory and cost, etc. There are a lot of reasons for these problems, but the main one is bullwhip effect. The increase in variability of the orders seen by each supply chain member is known as the bullwhip effect. That is, the orders placed by a retailer to a wholesaler are likely to be greater than the actual customer demand observed by that retailer. Orders to the manufacturer spike even more. The direct outcome of bullwhip effect is the overstock of inventories in the supply chain, which is caused by the exaggerated demand information. And also, the frequently changed demand information greatly increases the variability of production plans, which makes the companies in the supply chain restructure their according production plans and leads to the increase of extra cost expenditure and elevates the managerial difficulties. Sometimes, the bullwhip effect may bring about the hint of demand bloom, which will result in social asset blindly investment and repeated construction and hinder our national economy's healthy development.Bullwhip effect in supply chain causes the imbalanced inefficiency of supply chain, but it is determined by its own structure and can not be eliminated. Therefore, to minimize the influence of bullwhip effect is the key point in improving the efficiency and achieving the goal of supply chain. This paper presents the mechanism of bullwhip effect, simulates the three-level structure supply chain in Beer Game based on Powersim Platform and the countermeasures are put forward to reduce the bullwhip effect.This paper firstly discusses the reasons and harms of bullwhip effect in normal supply chain. Secondly, the systematic analysis and mathematic discussion are done toward the causes of bullwhip effect in supply chain, with the focus in demand behaviors, information sharing and supply chain structure. Then this paper simulates three-level structure supply chain in Beer Game based on Powersim platform and the conclusions are drawn that customer's demand change is the root reason for bullwhip effect, the reduction of lead time and all delays can decrease bullwhip effect. For the customer's demand change, it is suggested to reduce sale promotion or price discount...