Information transformation in a supply chain: a simulation study

Authors:
Gang Li;Shouyang Wang;Hong Yan;Gang Yu
Affiliations:
School of Economics and Management, Beijing University of Aeronautics and Astronautics, Beijing 100083, China and Institute of Policy and Planning Sciences, Tsukuba University, Japan;Academy of Mathematics and Systems Sciences, The Chinese Academy of Sciences, Beijing 100080, China and Institute of Policy and Planning Sciences, Tsukuba University, Japan;Department of Logistics, The Hong Kong Polytechnic University, Hong Kong, China;Department of Management Science and Information Systems, McCombs School of Business, The University of Texas at Austin, Austin, TX
Venue:
Computers and Operations Research
Year:
2005

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Abstract

We study the information transformation by simulating a multi-stage supply chain when the end customer's demand is a general autoregressive integrated moving average (ARIMA) process, and the information, represented in the form of orders, is propagated from downstream to upstream in the supply chain. Our simulation results indicate several important and novel phenomena that need further theoretical analysis: (1) the anti-bullwhip effect and the transition from the regular bullwhip effect; (2) the trend of information transformation at higher stages of a supply chain; (3) the impact of lead-time on information transformation and the so-called 'lead-time paradox'. In this paper, we will demonstrate these aspects via extensive computational experiments.