Supply chain network design with the presence of the bullwhip effect

Agus Darmawan, Hartanto Wijaya Wong and Jan Fransoo

International Journal of Production Economics, 2025, vol. 286, issue C

Abstract: This paper presents a modeling framework that integrates facility location-allocation and inventory control decisions, accounting for the potential presence of the bullwhip effect. Since incorporating the bullwhip effect adds complexity to the optimization problem, we apply linearization and approximation techniques in our solution approach. Through numerical experiments, we assess how the bullwhip effect influences optimal network design, focusing on various design parameters. The results suggest that the bullwhip effect can significantly influence network design, with lead time playing a particularly critical role in differentiating designs for supply chains with and without the bullwhip effect. Additionally, through a simulation study, we explore how incorporating the bullwhip effect may affect the resilience of supply chain networks when facing supply disruptions.

Keywords: Supply chain network design; The bullwhip effect; Supply chain resilience (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:286:y:2025:i:c:s0925527325001537

DOI: 10.1016/j.ijpe.2025.109668

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