When the bullwhip effect is an increasing function of the lead time


We study the relationship between lead times and the bullwhip effect produced by the order-up-to policy. The usual conclusion in the literature is that longer lead-time increase the bullwhip effect, we show that this is not always the case. Indeed, it seems to be rather rare. We achieve this by first showing that a positive demand impulse response leads to a bullwhip effect that is always increasing in the lead time when the order-up-to policy is used to make supply chain inventory replenishment decisions. By using the zeros and poles of the z-transform of the demand process, we reveal when this demand impulse is positive. To make concrete our approach in a nontrivial example we study the ARMA(2,2) demand process.

Aug 30, 2019 12:05
Berlin, Germany
Stephen Disney
Stephen Disney

My research interests involve the application of control theory and statistical techniques to operations management and supply chain scenarios to investigate their dynamic, stochastic, and economic performance.