Reducing the negative effects of sales promotions in supply chains using genetic algorithms

Authors:
T. O'Donnell;P. Humphreys;R. McIvor;L. Maguire
Affiliations:
Faculty of Business and Management, University of Ulster, Jordanstown Campus, Shore Road, Newtownabbey, Antrim BT37 0QBN, Ireland;Faculty of Business and Management, University of Ulster, Jordanstown Campus, Shore Road, Newtownabbey, Antrim BT37 0QBN, Ireland;Faculty of Business and Management, University of Ulster, Jordanstown Campus, Shore Road, Newtownabbey, Antrim BT37 0QBN, Ireland;ISEL, Faculty of Engineering, University of Ulster, Ireland
Venue:
Expert Systems with Applications: An International Journal
Year:
2009

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Abstract

This paper considers the detrimental effect of promotions on the supply chain (SC), one of the main causes of the bullwhip effect. A genetic algorithm (GA) is proposed to reduce these negative effects. In order to validate the GA, it is used to determine the optimal ordering policy in an online version of the MIT beer distribution game. Subsequently, the GA is applied in a number of experiments involving deterministic and random demand and lead times combined with sales promotions. It is shown how GAs can be used to dampen the impact of the bullwhip effect and can be used to assist supply managers in predicting reorder quantities along the supply chain.