Research on Bullwhip Effect Considering Allocation Mechanism in Supply Chain

Abstract

Commonly, an upstream member in a supply chain provides productions or resources for many downstream members. When the sum of retailers order quantities is beyond suppliers' inventories, suppliers might apply order allocation mechanism to solve the difficulty. The allocation mechanism is not considered in most of previous studies on the bullwhip effect. This paper develops the supply chain simulation software based browser/server technology, which can build tree-shape supply chain structure considering allocation mechanism. Two experiments are designed and implemented in order to isolate the effect of different order allocation mechanisms on bullwhip effect. The studies show that BWV differs from allocation mechanisms. For three types of supply chain members, the change tendencies of BWV with two allocation mechanism are similar. The paper also demonstrates that distributors have effect more obviously on bullwhip effect than other two roles with different allocation mechanism.