Simulation-Based Analysis of the Bullwhip Effect in a Multi-Echelon Bottled Water Supply Chain
DOI:
https://doi.org/10.55826/jtmit.v5i4.1980Keywords:
bullwhip effect, supply chain management, multi-echelon supply chainAbstract
This study investigates demand amplification, commonly known as the bullwhip effect, in a hypothetical three-echelon bottled-water supply chain comprising a retailer, distributor, and manufacturer. Due to the absence of empirical transaction data, weekly customer demand is generated using a seasonal Poisson process. Retailer and distributor ordering decisions are modeled using weekly order-up-to policies incorporating four-week moving-average forecasts, variable lead times, safety stock, order batching, and backordering. The simulation consists of 1,000 replications, each with a 52-week warm-up period followed by 208 weeks of analysis. The bullwhip effect (BE) is quantified as the ratio between the coefficients of variation (CVs) of outgoing orders and incoming demand. Under fixed proportional scaling, BE equals 1.000 at both supply-chain interfaces, indicating no amplification. In contrast, the policy-based simulation produces substantial demand amplification, with a median retailer-to-customer BE of 2.792 (95% simulation interval: 2.502–3.118) and a distributor-to-retailer BE of 1.857 (1.655–2.062). The cumulative distributor-to-customer variability ratio reaches 5.175 (4.570–5.936). These findings demonstrate that forecasting, replenishment policies, lead-time variability, safety stock, batching, and backordering can collectively amplify demand variability as orders move upstream. The results should be interpreted as evidence of the behavior of the specified simulation model rather than as a representation of any actual company or supply chain..
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