Bounded growth of the bullwhip effect under a class of nonlinear ordering policies
The growth of the bullwhip effect under nonlinear ordering policies is analyzed. Closed-form formulas are derived based on a describing-function approach. Nonlinearity in ordering policies is proven to cause bounded bullwhip effect growth. Impacts of mean demand, ordering periodicity, and forecasting method are derived. Various managerial insights hold the promise to help develop counteracting strategies.
bullwhip effect nonlinear frequency domain analysis order-up-to describing function