Impact of Echelon Ratio for the Bullwhip Effect in a Three-echelon Supply Chain Based on Multi-agent Simulation

Many papers have discussed the bullwhip effect in supply chain. However, little research has analyzed the impact of echelon ratio for the bullwhip effect. This paper aims at showing this impact in a three-echelon supply chain using multi-agent simulation. The result indicates that the bullwhip effect exists in not only single-player but also multi-player supply chain. In multi-player supply chain, echelon ratio is more sensitive than player number to affect the bullwhip effect. Order quantity fluctuation remains stable when echelon ratio changes for retailers. But this fluctuation gradually decreases with the increase of echelon ratio for distributors and manufacturers. When echelon ratio is relatively big, the amplification of order quantity fluctuation from distributor to manufacturer is relatively small; and the minimal fluctuation, the maximal fluctuation, the average fluctuation are approximately the same at retailer or distributor echelon. These conclusions offer a macroscopic management view for reducing the bullwhip effect. They can also provide references for estimating the bullwhip effect magnitude of different supply chains.

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