Modelling and Analysis of Bullwhip Effect with Customers’ Behaviours and Production Capacity Constraint

Abstract

Abstract:

Abstract： A system dynamics model was established hereto and validated by comparing simulation results with practical data from a tool manufacturer in Shanghai. Then the sequent oscillation characteristics of stochastic demand information were analyzed. For sensitive customer, adjustment of production capacity amplifies the bullwhip effect. For insensitive customer, adjustment of production capacity decreases the inventory level with stable market segment share. Based on these principles, it is concluded that suitable production strategy should be performed in accordance with different customers’ behaviors. It is necessary to promote customer service in the long run without adjusting the production capacity instantly. A ballance should be stricken between decreasing the inventory cost and dampening the bullwhip effect.

Key words: bullwhip effect, customers&rsquo, behaviours, production capacity constraint

CLC Number:

F 273.7

LIN Wenjin1a,JIANG Zhibin1a,LI Guowei1b,SUN Dongji2. Modelling and Analysis of Bullwhip Effect with Customers’ Behaviours and Production Capacity Constraint[J]. Journal of Shanghai Jiaotong University, 2015, 49(04): 537-542.

References

［1］林文进, 江志斌, 李娜. 服务型制造理论研究综述［J］. 工业工程与管理, 2009, 14(6): 16.

LIN Wenjin, JIANG Zhibin, LI Na. A survey on the research of serviceoriented manufacturing［J］. Industrial Engineering and Management, 2009, 14(6): 16.

［2］Goncalves P, Hines J, Sterman J. The impact of endogenous demand on pushpull production systems［J］. System Dynamics Review, 2005, 21(3): 187216.

［3］Forrester J W. Industrial dynamics—after the first decade［J］. Management Science, 1968, 14(7): 398415.

［4］Sterman J D. Modeling managerial behavior: Misperceptions of feedback in a dynamic decision making experiment［J］. Management Science, 1989, 35(3): 321339.

［5］Akkermans H, Vos B. Amplification in service supply chains: an exploratory case study from the telecom industry［J］. Production and Operations Management, 2003, 12(2): 204223.

［6］Nienhaus J, Ziegenbein A, Schoensleben P. How human behaviour amplifies the bullwhip effect. A study based on the beer distribution game online［J］. Production Planning & Control, 2006, 17(6): 547557.

［7］Suryani E, Chou S Y, Hartono R, et al. Demand scenario analysis and planned capacity expansion: A system dynamics framework［J］. Simulation Modelling Practice and Theory, 2010, 18(6): 732751.

［8］Martis M S. Validation of simulation based models: a theoretical outlook［J］. The Electronic Journal of Business Research Methods, 2006, 4(1): 3946.

［9］Barlas Y. Multiple tests for validation of system dynamics type of simulation models［J］. European Journal of Operational Research, 1989, 42(1): 5987.

［10］Anderson E G, Morrice D J, Lundeen G. The "physics" of capacity and backlog management in service and custom manufacturing supply chains［J］. System Dynamics Review, 2005, 21(3): 217247.

［11］Dejonckheere J, Disney S M, Lambrecht M R, et al. Measuring and avoiding the bullwhip effect: a control theoretic approach［J］. European Journal of Operational Research, 2003, 147(3): 567590.