Effects of Vendor-Managed Inventory on the Bullwhip Effect

Susanne Hohmann and Stephan Zelewski
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Susanne Hohmann: University of Applied Sciences of Gelsenkirchen and FOM University of Applied Sciences, Germany
Stephan Zelewski: University of Duisburg-Essen, Germany

International Journal of Information Systems and Supply Chain Management (IJISSCM), 2011, vol. 4, issue 3, 1-17

Abstract: The bullwhip effect means that demand variability increases as one moves up the supply chain. In the following article the bullwhip effect is quantified for each part of the supply chain which is presupposed to consist of a producer, a wholesaler, a retailer, and a consumer. After considering the causes of the bullwhip effect, it will be shown with the help of a nonlinear optimization model to what extent the bullwhip effect can be reduced using vendor-managed inventory (VMI) as one concept of Collaborative Planning, Forecasting and Replenishment (CPFR). In contrast to other studies in this field the reduction of the bullwhip effect will be accurately quantified for each part of the supply chain.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jisscm:v:4:y:2011:i:3:p:1-17

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