Measuring and eliminating the bullwhip in closed loop supply chains using control theory and Internet of Things

Abstract

Closed-loop supply chains are complex systems as they involve the seamless backward and forward flow of products and information. With the advent of e-commerce and online shopping, there has been a growing interest in product returns and the associated impact on inventory variance and the bullwhip effect. In this paper, a novel four-echelon closed-loop supply chain model is presented, where base-stock replenishment policies are modelled by means of a proportional controller. A stochastic state-space model is implemented, initially to capture the supply chain dynamics while the model is analysed under stationarity conditions with the aid of a covariance matrix. This allows the bullwhip effect to be expressed as a function of replenishment policies and product return rates. Next, an optimisation method is introduced to study the impact of the Internet of Things on inventory variance and the bullwhip effect. The results show that the Internet of Things can reduce costs associated with inventory fluctuations and eliminate the bullwhip effect in closed-loop supply chains.

Publication DOI: https://doi.org/10.1007/s10479-021-04136-7
Divisions: College of Engineering & Physical Sciences > School of Infrastructure and Sustainable Engineering
Additional Information: © 2021, The Author(s). This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
Uncontrolled Keywords: Bullwhip effect,Closed loop supply chain,Control theory,Internet of things,Inventory control,State space,Decision Sciences(all),Management Science and Operations Research
Publication ISSN: 1572-9338
Last Modified: 22 May 2024 16:01
Date Deposited: 17 Oct 2022 11:06
Full Text Link:
Related URLs: https://link.sp ... 479-021-04136-7 (Publisher URL)
PURE Output Type: Article
Published Date: 2021-06-07
Accepted Date: 2021-05-26
Authors: Papanagnou, Christos (ORCID Profile 0000-0002-5889-4209)

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