Flexibility dimensions to control the bullwhip effect in a supply chain

Abstract

In this paper, we analyse the consequences of two flexibility dimensions proposed in a previous approachadjustment capability and responsivenesson the bullwhip effect in a supply-chain model when a stochastic AR(1) demand process is considered. First modelling the manager's belief on forecasting in pull, push and hybrid ordering methods, it is revealed that high adjustment capability induces a robust reduction of the bullwhip effect. Secondly, it is found that maximal responsiveness is not always a necessary management strategy. Indeed, we show that these dimensions may be organised in a trade-off, always keeping amplification to acceptable values in the whole supply chain.