THE STABILITY, BULLWHIP EFFECT AND OPTIMIZATION OF A HORIZONTAL COLLABORATION SUPPLY CHAIN NETWORK

DONG HAN, FUGEE TSUNG

Abstract


In this paper, we study the stability, bullwhip effect and optimization of the orderpolicy system for a horizontal collaboration supply chain network in which two or more retailersor distributors may mutually accept a small order. Two Z-transform expressions of the solutionsto the order equations are obtained respectively for the horizontal collaboration and non-horizontalcollaboration supply chain networks. It is shown that a stable (unstable) order policy system forthe non-horizontal collaboration supply network can remain (become) stable in the horizontal collaborationsupply network as long as suitable order policies are adopted. Conditions sufficient forthe absence or presence of the bullwhip effect in the order policy system are obtained. A special relationbetween the horizontal collaboration and non-horizontal collaboration supply chain networksis proved. This relation shows that the horizontal collaboration supply chain network can eitherenhance or reduce the bullwhip effect in the non-horizontal collaboration supply chain network.Moreover, we present an approach to obtain the optimal order policy indirectly.

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