Investigation of rolling horizon flexibility contracts in a supply chain under highly variable stochastic demand

Patrick M. Walsh; Peter A. Williams; Cathal Heavey

doi:10.1093/imaman/dpm035

Investigation of rolling horizon flexibility contracts in a supply chain under highly variable stochastic demand

Patrick M. Walsh, Peter A. Williams, Cathal Heavey

School of Engineering

University of Limerick

Research output: Contribution to journal › Article › peer-review

Abstract

A discrete-event simulation model of a supply chain has been developed to evaluate operational performance of sharing uncertain information on upcoming demand between an original equipment manufacturer (OEM) and a contract manufacturer under a formal rolling horizon flexibility (RHF) contract in a four-node supply chain. There are two types of RHF contracts evaluated, i.e. RHF contract with constant flexibility and decreasing flexibility bounds. The demand is externalized (i.e. the OEM receives the demand), stochastic and generated according to a gamma distribution. This paper reports on the analysis of RHF contracts operating with coefficients of variation of demand up to 2.00. Analysis of the interaction of RHF contracts with forecasting and the impact an RHF contract has on the transmission of the bullwhip effect are reported here.

Original language	English
Pages (from-to)	117-135
Number of pages	19
Journal	IMA Journal of Management Mathematics
Volume	19
Issue number	2
DOIs	https://doi.org/10.1093/imaman/dpm035
Publication status	Published - Apr 2008

Keywords

Bullwhip
Coefficient of variation
Discrete event
Performance analysis
RHF contract
Simulation

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10.1093/imaman/dpm035

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abstract = "A discrete-event simulation model of a supply chain has been developed to evaluate operational performance of sharing uncertain information on upcoming demand between an original equipment manufacturer (OEM) and a contract manufacturer under a formal rolling horizon flexibility (RHF) contract in a four-node supply chain. There are two types of RHF contracts evaluated, i.e. RHF contract with constant flexibility and decreasing flexibility bounds. The demand is externalized (i.e. the OEM receives the demand), stochastic and generated according to a gamma distribution. This paper reports on the analysis of RHF contracts operating with coefficients of variation of demand up to 2.00. Analysis of the interaction of RHF contracts with forecasting and the impact an RHF contract has on the transmission of the bullwhip effect are reported here.",

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AB - A discrete-event simulation model of a supply chain has been developed to evaluate operational performance of sharing uncertain information on upcoming demand between an original equipment manufacturer (OEM) and a contract manufacturer under a formal rolling horizon flexibility (RHF) contract in a four-node supply chain. There are two types of RHF contracts evaluated, i.e. RHF contract with constant flexibility and decreasing flexibility bounds. The demand is externalized (i.e. the OEM receives the demand), stochastic and generated according to a gamma distribution. This paper reports on the analysis of RHF contracts operating with coefficients of variation of demand up to 2.00. Analysis of the interaction of RHF contracts with forecasting and the impact an RHF contract has on the transmission of the bullwhip effect are reported here.

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KW - Coefficient of variation

KW - Discrete event

KW - Performance analysis

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Investigation of rolling horizon flexibility contracts in a supply chain under highly variable stochastic demand

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Keywords

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