Reducing bullwhip oscillation in a supply chain: A system dynamics model-based study

The dynamics of change management in a supply chain context are addressed by the use of system dynamics models. The focus is on the bullwhip effect and the possible overshoot and oscillation that can arise in Finished Goods (FG) inventories from it. Enterprise-wide information visibility between supply chain partners, have already proved their worth as effective measures to combat information distortion and to arrest the bullwhip propagation. Strategies such as, expanded workweek to absorb sudden surges in production demand, as well as tweaking order forecasts have been tested and found to be capable complements to information visibility. The purpose of this paper is to study a third complementary strategy of lengthening inventory replenishment times to see if further reductions in the bullwhip effect can be observed. Specifically, ordering policies that do not entail the immediate replenishment of used up safety stocks will be considered.