Modeling and analysis of Cash-flow and inventory bullwhip effect in an automobile supply chain

The bullwhip effect is known for causing disruptions across supply chains, especially when the supply chain networks get more complex with added echelons and players. It may lead to great inefficiencies like having excessive inventory, repeated instances of backorders and stock-outs. The automobile supply chain is not shy of experiencing these shortcomings. Being a complex yet efficient supply chain, the automobile sector seems to grow exponentially each year and tends to make leaps in terms of advancements. This paper primarily focuses on studying the Working Capital (WC) bullwhip, Cash flow bullwhip (CFB) using cash conversion cycle as a metric and finally Inventory bullwhip across an automobile supply chain. The mathematical model is developed for inventory in a multi echelon supply chain model consisting of Suppliers, the OEM, dealerships and the customer. This model is extended to study cash flow bullwhip in the supply chain. The experiments were carried out after carrying out a DOE, consisting of some major metrics of the real world automobile supply chain namely lead times, profit margins, payment behavior, demand patterns and information sharing. We find that by increasing variability of the various factors, there was a significant increase in the inventory and cash flow bullwhips. Major fluctuations were also observed amongst the echelons when parameters and metrics were varied. Advisor: Dr. Vittaldas Prabhu Reader: Dr. Jeya Chandra