An Optimization Model for Mitigating Bullwhip-effect in a Two-echelon Supply Chain

Bullwhip effect (BWE) is a conundrum, addressing the shift of a seemingly steady inventory demand into enhancing demand fluctuation in upstream supply chain. On upswing it can be very expensive in terms of stock out costs and capability on-costs while on the downtrend it can be costly in terms of stock carrying and obsolescence costs. To ameliorate the firm's efficiency, in this paper we propose an optimization model to mitigate the bullwhip effect in a two-echelon supply chain. The objective function is to minimize the sum difference between the actual order and the demand forecast of multiple products and the exponential smoothing technique, is performed to forecast demand of products. The model is further testified by an illustration of five products and it shows that the model facilitates to dig out an optimal set of parameters to mitigate the BWE.