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Vendor-managed inventory and bullwhip reduction in a two-level supply chain

Disney, Stephen Michael and Towill, Denis Royston 2003. Vendor-managed inventory and bullwhip reduction in a two-level supply chain. International Journal of Operations & Production Management 23 (6) , pp. 625-651. 10.1108/01443570310476654

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Abstract

Compares the bullwhip properties of a vendor managed inventory (VMI) supply chain with those of a traditional “serially-linked” supply chain. The emphasis of this investigation is the comparative impact the two structures have on the “bullwhip effect” generated. Particular attention is paid to the manufacturer's production ordering activities as demonstrated using a simulation model based on difference equations. Documents and considers each of the four important sources of the bullwhip effect in turn. The analysis shows that with VMI implementation two sources of the bullwhip effect may be completely eliminated, i.e. rationing and gaming or the Houlihan effect, and the order batching effect or the Burbidge effect. VMI is also significantly better at responding to rogue changes in demand due to the promotion effect or to price induced variations. However, the effect of VMI on demand signal processing induced bullwhip or the Forrester effect is less clear cut. Concludes that on balance VMI offers a significant opportunity to reduce the bullwhip effect in real-world supply chains.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Cardiff Centre for Crime, Law and Justice (CCLJ)
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 > HE Transportation and Communications
H Social Sciences > HF Commerce
Uncontrolled Keywords: Dynamics; Inventory control; Management; Production planning and control; Supply chain; Vendors
Publisher: Taylor & Francis
ISSN: 0144-3577
Date of First Compliant Deposit: 19 April 2016
Last Modified: 04 Jun 2017 16:58
URI: http://orca.cf.ac.uk/id/eprint/38772

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