Solving the Bullwhip Effect in Supply Networks by incentivizing behaviour through decentralized Forecast Accuracy Discount agreements: A simulation case study within the Supply Chain of the Technische Unie and Legrand Nederland

Solving the Bullwhip Effect in Supply Networks by incentivizing behaviour through decentralized Forecast Accuracy Discount agreements: A simulation case study within the Supply Chain of the Technische Unie and Legrand Nederland

Van der Drift, L.

Verbraeck, A. (mentor)
Warnier, M. (mentor)
Van Duin, R. (mentor)
Rezae, S.A. (mentor)
Van Delden, H. (mentor)

Technology, Policy and Management

Multi Actor Systems

Systems Engineering

2012-01-27

Current research towards solutions on the Bullwhip Effect have focused mainly on the systemic and operational causes of the Bullwhip Effect, resulting in solutions that require high levels of organizational integration, central coordination and information sharing. However, Such solutions are not always feasible within actual complex Supply Network structures, effective within the bounded rational self-optimizing behaviour of companies, acceptable towards the strategic perception of sensitivity of operational information, nor suitable within the authority and responsibility structures of organizations. Therefore we have developed Forecast Accuracy Discount agreements as decentralized solutions which financially incentivize customers to smoothen their purchase orders by rewarding predictable ordering according to previously shared forecasts of their own expected future orders. We use a simulation model based on a case study to test the effects of the agreements on the operational behaviour of both suppliers and customers and the outcomes on the operational performance to demonstrate that the agreements are able to create Pareto Improvements for both parties and incentivize them to adopt the agreements and further exploit the potential benefits by adjusting their operational systems to further synchronize their operations.

Bullwhip Effect
Supply Networks
Supply Chain Management
Incentivizing
Decentralized coordination
Forecast Accuracy Discount agreements

http://resolver.tudelft.nl/uuid:13554054-6592-4e63-99c8-5e2abc7f86ee

Student theses

master thesis

(c) 2012 Van der Drift, L.