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Smooth is smart: Bullwhip, inventory, fill-rates and the golden ratio

Disney, Stephen Michael, Towill, Denis Royston, Farasyn, I., Lambrecht, Marc and Velde, W. Van de 2005. Smooth is smart: Bullwhip, inventory, fill-rates and the golden ratio. Tijdschrift voor Economie en Management L (2) , pp. 167-187.

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Abstract

A major cause of supply chain deficiencies is the bullwhip effect. This effect refers to the tendency of the variance of the replenishment orders to increase as one moves up a supply chain. Supply chain managers experience this variance amplification in both inventory levels and replenishment orders. As a result, companies face shortages or bloated inventories, run-away transportation and warehousing costs and major production adjustment costs. In this article we analyze a major cause of the bullwhip effect and suggest a remedy. We focus on a unique replenishment rule that is able to reduce the bullwhip effect. In general, bullwhip reduction may have a negative impact on customer service due to inventory variance increases. Our analysis shows that bullwhip can be satisfactorily managed without unduly increasing stock levels to maintain target fill rates.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HE Transportation and Communications
H Social Sciences > HF Commerce > HF5601 Accounting
ISSN: 0772-7674
Last Modified: 04 Jun 2017 04:37
URI: http://orca.cf.ac.uk/id/eprint/41673

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Cited 8 times in Google Scholar. View in Google Scholar

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