Impact of Orde
Impact of Order Batching on Compound Bullwhip Effect
Mina H. Mikhail 1, Mohamed F. Abdin 2 and Mohamed A. Awad 3
1 Industrial Automation Department, German University in Cairo (GUC), Egypt
2, 3 Design and Production Engineering department, Ain Shams University, Egypt
Abstract: Order batching in supply chains provides economic benefit in aggregating demand to save in production and transportation costs. However, rounding of orders to achieve a batch size is recognized as a source of the bullwhip effect problem within supply chains. Conditions are established under which two or more causes may attenuate or dampen the net BWE. The proposed supply chain consists of a supplier feeding two retailers with stochastic demand, described by a first order autoregressive AR(1) time series process. Supplier feeds retailers in batches for a number of future time units based on the MMSE demand forecasting method. Two BWE measures are studied, one for each demand stream individually and one for the aggregated demand. These two measures are related to demand parameters of the retailers and the number of forecasting time units. Supplier should select the optimum batch size based on demand forecasting, such that the aggregate BWE of the two retailers is less than the sum of the separate BWE.
[Mina H. Mikhail, Mohamed F. Abdin and Mohamed A. Awad. Impact of Order Batching on Compound Bullwhip Effect. J Am Sci 2013;9(6):509-514]. (ISSN:1545-1003). http://www.jofamericanscience.org. 63
Keywords: Bullwhip Effect BWE, Order batching, compound BWE, separate BWE. Full Text 63