Quantifying the impact of a supply chain's design parameters on the bullwhip effect using simulation and Taguchi design of experiments

Abstract

PurposeThe purpose of this paper is to quantify the effect of design parameters on the bullwhip effect and dynamic responses produced by a multi‐echelon supply chain with information sharing.Design/methodology/approachTaguchi design of experiments and system dynamics simulation are used to quantify the impact of a supply chain's design parameters, including degree of information sharing, on its dynamic performance, and the interactions that occur as the parameter values are varied.FindingsQuantified relationships between supply chain design parameters and dynamic performance, including the bullwhip effect, are presented. Two parameters in particular, time to adjust inventory error and production lead time, are shown to have a particularly strong impact on the order variance compared to other parameters. However, there are several other significant findings.Research limitations/implicationsBatching and capacity constraints are common causes of the bullwhip effect, but they are not included here. Future work should quantify the impact of these.Practical implicationsThis paper presents a systematic way for quantifying and understanding the impact of supply chain design parameters on the bullwhip effect and dynamic responses, and their interactions. The experimental results provide practical understanding for supply chain managers.Originality/valuePrevious studies have identified causes of the bullwhip effect but little attention has been given to quantifying their impact and interactions. This paper makes a contribution towards filling this gap, using system dynamics simulation and Taguchi design of experiments.