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Transfer function analysis of forecasting induced bullwhip in supply chains

Dejonckheere, J., Disney, Stephen Michael, Lambrecht, M. R. and Towill, Denis Royston 2002. Transfer function analysis of forecasting induced bullwhip in supply chains. International Journal of Production Economics 78 (2) , pp. 133-144. 10.1016/S0925-5273(01)00084-6

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The present paper analyses the bullwhip problem generated by exponential smoothing algorithms in both “stand alone” passing-on-orders mode, and within inventory controlled feedback systems. Results are predicted from transfer function analysis, and then confirmed by simulation via the Bullwhip Explorer supply chain software. A novel feature of the paper is the introduction of the “matched filter” concept into the exponential smoothing algorithm. This adjusts the value of the smoothing constant depending on whether the Constant, Linear, or Quadratic forecasting model is used. It is shown that matching the filter via noise bandwidth equalises the output variance when the demand is a random signal. Hence some of the unwanted effects of using the Linear and Quadratic forecasting models are attenuated. However, there is little benefit obtained by using sophisticated forecasting methods within inventory controlled feedback systems as their tracking ability is reduced.

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 > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Uncontrolled Keywords: Exponential smoothing; Bullwhip effect; Supply chain; Forecasting; Ordering decisions
Publisher: Elsevier
ISSN: 0925-5273
Last Modified: 03 Mar 2020 02:30

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