Analyzing the Relationship between Batch Sizing and Bullwhip Effect in Two-tier Supply Chain: A Case Study of Selected Pakistan Rice Firms

Abstract

The purpose of this research is to investigate the bullwhip effect in two tier supply chain. Simulation has been used as a methodology to analyse the impact of batching on bullwhip in rice industry of Pakistan. Two cases of the rice industry have been chosen as a sample. The contribution of this research is two-fold. Firstly, the current research is an extension of a study by Hussain and Drake (2011) that analyses the relationship between batch size and bullwhip effect as non-monotonic, whereby the size of the remainder of quotient determines the value of bullwhip effect. Secondly, the batch size has less frequently been studied in the context of bullwhip effect; hence the researcher has extended strength to the existing supply chain model. It has been found that the relationship between batch size and demand amplification is non linear. It cannot be said that reducing the batch size will minimize the bullwhip effect. Batch size larger than average demand does not result in bullwhip effect. In other words, variance of the order quantity is smaller than the variance of demand, which leads to anti-bullwhip or dewhips effect. This study will help the practitioners and supply chain managers to control the bullwhip produced by batching effect across multi-echelon supply chains. However, this study has been based on two tier supply chain while in reality supply chain has got many tiers. Hence, this study can be extended across more than two tier supply chains.