Information distortion in a supply chain: the bullwhip effect
Management Science - Special issue on frontier research in manufacturing and logistics
Value of Information in Capacitated Supply Chains
Management Science
Time Series Analysis: Forecasting and Control
Time Series Analysis: Forecasting and Control
A Single-Item Inventory Model for a Nonstationary Demand Process
Manufacturing & Service Operations Management
The Effect of Collaborative Forecasting on Supply Chain Performance
Management Science
The Value of Information Sharing in a Two-Level Supply Chain
Management Science
Supply Chain Inventory Management and the Value of Shared Information
Management Science
Altruistic behaviour in a two-echelon supply chain with unmatched proportional feedback controllers
International Journal of Intelligent Systems Technologies and Applications
| Hi-index | 22.14 |
This paper analyses an infinite horizon two-echelon supply chain inventory problem and shows that a sequence of the optimum ordering policies does not yield globally optimal solutions for the overall supply chain. First-order autoregressive demand pattern is assumed and each participant adopts the order-up-to (OUT) policy with a minimum mean square error forecasting scheme to generate replenishment orders. To control the dynamics of the supply chain, a proportional controller is incorporated into the OUT policy, which we call a generalised OUT policy. A two-echelon supply chain with this generalised OUT policy achieves over 10% inventory related cost reduction. To enjoy this cost saving, the attitude of first echelon player to cost increases is an essential factor. This attitude also reduces the bullwhip effect. An important insight revealed herein is that a significant amount of benefit comes from the player doing what is the best for the overall supply chain, rather than what is the best for local cost minimisation.