Analysis of bullwhip effect in reverse supply chain

Abstract

Demand variability increases when it moves downstream to upstream in a supply chain is called “Bullwhip effect”. The paper describes the impact of two different information sharing strategies decentralized and centralized under two different demand forecasting policies (Moving Average and Exponential Weighted Moving Average). The bullwhip ratio is calculated for the two different policies by using the analytical models. Using simulation based analysis the variance of demand is performed for a three stage reverse supply chain, consisting of single supplier of waste paper, godown owner and waste paper merchant. Two inventory control policies (min‐max and stock‐to‐demand) are used for the analysis. The results of the analytical analysis and the simulation based analysis are validated by taking a waste paper recycling industry and the research recommends some key points to reduce the bullwhip effect of reverse supply chain.

Citation

Sharma, N., Balan, S., Vrat, P. and Kumar, P. (2006), "Analysis of bullwhip effect in reverse supply chain", Journal of Advances in Management Research, Vol. 3 No. 2, pp. 18-33. https://doi.org/10.1108/97279810680001243