The Impact of Lead-Time on Bullwhip Effect in Supply Chain

An important contributory factor to the bullwhip effect is the non-lead-time in the supply chain. This paper investigates the influences of production/distribution lead-time on the bullwhip effect under order-up-to (OUT) policy using control engineering method, comparing the performances of order rate and inventory level in different lead-time situations. When the lead-time is longer, the order rate of the supply chain system become more oscillatory and the bullwhip effect phenomenon become more evidence. In addition, this paper analysis the impact of lead-time on the inventory level, and concludes that the total inventory level is positive related to the lead-time, the longer the lead-time, the higher the total inventory level.