A COMPARATIVE STUDY OF SIMULATION AND TIME SERIES MODEL IN QUANTIFYING BULLWHIP EFFECT IN SUPPLY CHAIN

Abstract

Bullwhip (or whiplash) effect is an observed phenomenon in forecast driven distribution channeland careful management of these effects is of great importance to managers of supply chain.Bullwhip effect refers to situations where orders to the suppliers tend to have larger variance thansales to the buyer (demand distortion) and the distortion increases as we move up the supply chain.Due to the fact that demand of customer for product is unstable, business managers must forecast inorder to properly position inventory and other resources. Forecasts are statistically based and in mostcases, are not very accurate. The existence of forecast errors made it necessary for organizations tooften carry an inventory buffer called “safety stock”. Moving up the supply chain from the end userscustomers to raw materials supplier there is a lot of variation in demand that can be observed, whichcall for greater need for safety stock.This study compares the efficacy of simulation and Time Series model in quantifying the bullwhipeffects in supply chain management.

Keywords

• Comparison
• efficacy
• simulation and time series model
• quantifying
• bullwhip effect
• supply chain.