Bullwhip Effect Research In Supply Chains With Risk Pooling

Bullwhip Effect in supply chains has been a hot topic in supply chain research.Supply chains’ performance has been seriously affected by the bullwhip effect whichresults in high stock levels, coexist of product shortage and superfluous, lowwarehouse utilization rate, and disorder of production plan, etc.In this paper, in order to find the cause of controversy between case study ofenterprise data and theory researches, we investigate the impact of the third-partywarehouse, number of supply chain stages and risk-pooling effect on the bullwhipeffect. It is assumed that order-up-to inventory policy is employed by players ofsupply chains; demand signals are modeled as an first-order autocorrelation timeseries model, AR(1); the minimum mean square error forecasting technique canforecast future demand of lead times. We can get the conclusion that (1) the existenceof the third-party warehouse does not have any impact on bullwhip effect in supplychain, but this finding can provide a method to simplify complex supply chain models;(2) based on simplified linear supply chain model, we compare the bullwhip effectmeasure of a two-stage supply chain model with that of a three-stage supply chainmodel, and find that number of supply chain stages does not have any impact on thebullwhip effect, and that total lead times of productions from manufactures toterminal consumers are key to affect the bullwhip effect; in fact, based on thisconclusion and minimum cost principle, supply chain managers can adjust the numberof supply chain stages through increasing or decreasing number of supply chain stages;(3) risk-pooling effect is also an important factor which affects bullwhip effect, wefind that retailers or other similar players which have a big demand fluctuation candecrease lead time to mitigate the bullwhip effect, and retailers or other similar playerwhich have a smaller demand variation can increase lead time to alleviate thebullwhip effect; similarity of demand attribute or demand covariance coefficientamong retailers will determine the bullwhip effect in supply chains.