Statistical Analysis of the Bullwhip Effect in a Special Supply Chain Structure
The bullwhip effect (BWE) argues that demand variability grows as customer orders go up the supply chain. A specific two-stage supply chain with one manufacturer and one retailer is used to forecast, quantify, and measure the bullwhip effect. A single product is assumed relative to ABC analysis which represents the highest annual consumption in class “A” items. The retailer uses “order-up-to” inventory policy for replenishment of stocks and utilization. Statistical analysis is employed. Retailers utilize moving average and exponential smoothing forecasting algorithms to predict demand in advance. The findings indicate that the magnitude of the increase in variability is dependent on the forecasting method used. Furthermore, information sharing and customer loyalty are regarded as two methods for reducing the bullwhip effect.
Keywords - Supply Chain Management, Bullwhip Effect, Exponential Smoothing Forecast, Moving Average Forecast, ABC Analysis