Optimization of supply chain: solving the «BullWhip Effect» for supplier orders

Abstract

This research pays special attention to the analysis of the Bullwhip Effect (BE) in supply chains and its impact on increasing the variability of orders compared to end-user demand. During global crises, such as a pandemic or war, supply chains face a significant increase in the unreliability of order fulfillment. This leads to disruptions in the movement of information and material flows, violating the main goal of the logistics system - meeting both own and client needs. The article discusses possible strategies to mitigate the BE, in particular, the importance of information exchange and integration for effective coordination between the links of the supply chain. It is noted that improving these aspects can lead to a reduction in order variability and optimization of inventory management. This study focuses on the analysis of a two-link supply chain with one store and one supplier. The store places an order, taking into account the policy of inventory management and unreliability of supply. The influence of these factors on the variability of orders compared to demand was studied. A model for calculating orders from the second link of the supply chain is proposed, which takes into account forecasts, changes in the minimum balance of the store and the unreliability of deliveries to stores. Examples illustrating the use of the model are given. It is shown that such an approach can contribute to a more accurate satisfaction of the needs of end consumers and reduce the unpredictability of inventory management. The importance of effective coordination and integration to ensure the stability of supply chains is emphasized. The proposed model can serve as a basis for the development of more effective supply chain management practices in the modern business.

Keywords

• supply chain
• «bullwhip effect»
• forecasting
• order fulfillment
• minimum stock