Examining the causes of the 'bullwhip effect': a study of the Qinhuangdao Port's coal supply chain

Abstract

Although in recent years the coal business of Qinhuangdao Port maintains relatively efficient operations, the problem of coal inventory overstock remains. The main reason of such problem is the bullwhip effect. In this study, we analysis the causes of the bullwhip effect of Qinhuangdao Port's coal supply chain and examine the relative contribution of each of the causes of the bullwhip effect. Simulation models developed by Witness are used in collecting data. A factorial design is used to measure the relative contributions of the causes of the bullwhip effect. We find that amendatory inventory is the most significant one among the causes, followed by demand forecast updating, number of echelons, information delay, transportation delay and order batching. The result shows the most seriously causes of the bullwhip effect of Qinhuangdao Port's coal supply chain and provides possible ways to mitigate the bullwhip effect.