Supply chain management

Topics: Supply chain management, Inventory, Supply chain Pages: 9 (4009 words) Published: August 20, 2014
Available online at

Procedia Engineering 69 (2014) 63 – 71

24th DAAAM International Symposium on Intelligent Manufacturing and Automation, 2013

Bullwhip Effect Study in a Constrained Supply Chain
Borut Buchmeistera,*, Darko Friscicb, Iztok Palcica

University of Maribor, Faculty of Mechanical Engineering, Lab. for Production Management, Smetanova 17, SI – 2000, Maribor, Slovenia, EU b
CIMOS TAM Ai, d.o.o., Perhavceva 21, SI – 2000 Maribor, Slovenia, EU

Well organized supply chains are one of the best ways to compete in today's marketplaces. For make-to-stock production systems the production plans and activities are based on demand forecasting, which is one of the key causes of the bullwhip effect (BE). BE is the inherent increase in demand fluctuation up the supply chain and produces excess inventory and poor customer service. In the paper we simulated a simple three-stage supply chain using seasonal (SM) and deseasonalized (DSM) time series of the market demand data in order to identify, illustrate and discuss the impacts of different level constraints on the BE. The results are presented for different overall equipment effectiveness (OEE) and constrained inventory policies. At higher OEE level manufacturers have less variability in production processes; the BE is stronger in DSM than in SM. © 2014 The Authors. Published by Elsevier Ltd.

© 2014 The Authors. Published by Elsevier Ltd.
Selection and peer-review under responsibility of DAAAM International Vienna. Selection and peer-review under responsibility of DAAAM International Vienna Keywords: Supply chain; bullwhip effect; simulation; capacity constraints

1. Introduction
Supply chain management (SCM) is one of the most important and developing areas. It includes basically demand fulfilment, demand planning and supply planning. It integrates internal and external logistics across many manufacturers, suppliers, distributors, retailers, and transportation providers to increase productivity and to obtain a competitive advantage for all parties involved. The objective of supply chain management is to provide a high velocity flow of high quality, relevant information that will enable suppliers to provide an uninterrupted and precisely timed flow of materials to customers. The idea is to apply a total systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the

* Corresponding author. Tel.: +386-2-220-7631; fax: +386-2-220-7990. E-mail address:

1877-7058 © 2014 The Authors. Published by Elsevier Ltd.
Selection and peer-review under responsibility of DAAAM International Vienna doi:10.1016/j.proeng.2014.02.204


Borut Buchmeister et al. / Procedia Engineering 69 (2014) 63 – 71

end customer. Design of supply chain networks includes network configuration and related operational decisions. The original motive of SCM was “elimination of barriers between trading partners” in order to facilitate synchronization of information between them [1]. But in real business this idea became lost. Where is the main problem? Supply chain performance depends on the operation of all members in a supply chain, where each member's basic objective is the optimisation of its own performance. Such behaviour of members can lead to less optimal whole chain performance. Members of a supply chain are used to compete and not to co-operate; they don't share information about products, customers, inventories, production capacities, costs and other business processes. So the members don't know much about the real market situation and the efficiency in their chain. They just repeat five basic activities in their supply chain: buy, make, move, store and sell. Simulation is a very powerful and widely used management science technique [2] for the analysis and study of supply chains. The most important types...

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