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The impact of information enrichment on the Bullwhip effect in supply chains: A control engineering perspective

Dejonckheere, J., Disney, Stephen Michael, Lambrecht, M. R. and Towill, Denis Royston 2004. The impact of information enrichment on the Bullwhip effect in supply chains: A control engineering perspective. European Journal of Operational Research 153 (3) , pp. 727-750. 10.1016/S0377-2217(02)00808-1

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Abstract

This paper examines the beneficial impact of information sharing in multi-echelon supply chains. We compare a traditional supply chain, in which only the first stage in the chain observes end consumer demand and upstream stages have to base their forecasts on incoming orders, with an information enriched supply chain where customer demand data (e.g. EPOS data) is shared throughout the chain. Two types of replenishment rules are analysed: order-up-to (OUT) policies and smoothing policies (policies used to reduce or dampen variability in the demand). For the class of OUT policies, we will show that information sharing helps to reduce the bullwhipeffect (variance amplification of ordering quantities in supply chains) significantly, especially at higher levels in the chain. However, the bullwhip problem is not completely eliminated and it still increases as one moves up the chain. For the smoothing policies, we show that information sharing is necessary to reduce order variance at higher levels of the chain. The methodology is based on control systems engineering and allows us to gain valuable insights into the dynamic behaviour of supply chain replenishment rules. We also introduce acontrolengineering based measure to quantify the variance amplification (bullwhip) or variance reduction.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Uncontrolled Keywords: Supply chain management; Replenishment rule; Bullwhip effect; Production smoothing; Control theory
Publisher: Elsevier
ISSN: 0377-2217
Date of First Compliant Deposit: 8 June 2016
Last Modified: 04 Jun 2017 11:09
URI: http://orca.cf.ac.uk/id/eprint/38147

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