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An Agent-Based Simulation to Quantify and Analyze Bullwhip Effects in Supply Chains

The paper presents an agent-based simulation to model supply chains (SCs) and evaluate the bullwhip effect, an important index to measure the stability of SCs, under the stochastic demand and lead time. We carried out a series of numerical experiments to measure the bull whip effects in two scenarios. In the first scenario with a simple 2-tier SC, the results of simulation were obtained and compared directly to the analytical counterparts in literature. From the comparison between simulated and analytical results, it was figured out that the assumption of non-negative demand/order quantities, which are usually not considered in analytical models, could affect the results of bullwhip effect measurement. In the second scenario, the bullwhip effect in a 4-tier SC was evaluated to observe quantitatively how the variances in demands and replenishment orders are amplified while moving upwards the SC.