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QUANTIFYING THE BULLWHIP EFFECT IN THE SUPPLY CHAIN OF SMALL-SIZED COMPANIES

This research addressed the Bullwhip Effect (BWE) in the supply chain of small companies. Identifying ways to control the BWE requires that it be understood in the context of small companies. This research analyzed quantitatively the impact of the interaction between demand management strategies and forecasting methods on BWE. Experiments were performed with four management strategies and three forecasting techniques for different levels of seasonality, lead times, and order batching. Costs and an overall BWE index were used as performance measures. Results indicate that no demand management strategy dominates under all conditions. However, the collaborative demand management strategies are best under low seasonality regardless of the forecasting method and lead time nature. Higher levels of communication do not result in the same level of improvement; it depends on the seasonality of the demand. Stochastic lead times do not exacerbate BWE when the items are batched. A quantification methodology is proposed.