Bullwhip effect mitigation in trading system: A system dynamics approach

This paper deals with the modelling and simulation in the business of packaging where products are stocked based on forecasting and inventory policies. The model refers to the stochastic demand between the manufacturer, retailer and customers. The main objective of this paper is to reduce the Bullwhip Effect and enhance the efficiency of supply chain. The key variables of study are Supplier ordering rate, Supply line, Acquisition rate, Shipment rate, Backlog, Inventory, and Indicated orders. The results depict that lead time has to be brought down to four weeks, in the trading industry under consideration, if there has to be a drastic reduction in Bullwhip Effect. Accordingly, suggestions are made to reduce lead time through root cause analysis.