BULLWHIP EFFECT SIMULATION OF A SUPPLY CHAIN WITH LEVEL CONSTRAINTS.

For make-to-stock production systems the production plans and activities are based mainly on demand forecasting, which is one of the key causes of the bullwhip effect. The bullwhip effect (BE) is the inherent increase in demand fluctuation up the supply chain. In the paper we have illustrated the phenomenon of bullwhip effect using real demand data in three simulation cases of a supply chain with different level constraints. We experimented with a simple three-stage supply chain using seasonal and deseasonalized time series of the market demand data in order to identify, illustrate and discuss the impacts of different level constraints on the BE. The results are presented for different overall equipment effectiveness (OEE) and constrained inventory policies. At higher OEE level there is less variability in production processes, but at inventory limitations the impact is more complex. The goals of this paper are to discuss the causes of the BE and investigate the potential benefit that information sharing offers for overcoming these problems. [ABSTRACT FROM AUTHOR]