The bullwhip effect in the closed loop supply chain

A simple system dynamics model of a traditional/closed loop supply chain system is investigated. Particularly, the effect of remanufacture, remanufacturing lead-time and the return rate on the inventory variance and bullwhip effect were studied. Our results clearly showed that the bullwhip in the closed loop supply chain is bigger than one in traditional supply chain and foreign to the collection rate and the inventory variance in every stage decrease when the remanufacture is introduced into the traditional supply chain. Furthermore, we found that the bullwhip effect in the closed loop supply chain will increase when the short term lead time of remanufacture cycle time increase and is independent of the long term lead time of remanufacture, and inventory variance will increase in first two stages but will decrease for the producer stage. Keyword: Remanufacturing Inventory variance Bullwhip effect System dynamics

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