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http://dx.doi.org/10.9709/JKSS.2013.22.2.041

Bullwhip Effect Minimization vs. Cost Minimization in Supply Chain  

Cho, Myeon Sig (경기대학교 산업경영공학과)
Abstract
Tendency for small changes in end-consumer demand to be amplified as one moves further up the supply chain is known as bullwhip effect (BE). BE is usually defined as variance(order)/variance(demand). Since such distorted information throughout the supply chain can lead to inefficiencies, many studies to reduce variance(order) have been performed. However, in this study, we show that minimization of BE may increase inefficiencies of the supply chain. We introduce a new objective function to increase system efficiency using smoothed ordering policies. Simulation optimization is utilized to find optimal smoothed ordering policies.
Keywords
Supply chain; Bullwhip effect; Smoothed replenishment policy; Simulation optimization;
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