Modeling and analysis of cash-flow bullwhip in supply chain

Rattachut Tangsucheeva, Vittaldas Prabhu

Research output: Contribution to journalArticlepeer-review

36 Scopus citations


The bullwhip effect that occurs in supply chain inventory can distort demand forecasts and lead to inefficiencies such as excessive inventory, stock-outs, and backorders. In this paper we theorize that inventory bullwhip also leads to cash-flow bullwhip (CFB). Specifically, this paper focuses on studying CFB by developing mathematical and simulation models to analyze the relationship between inventory and cash-flow bullwhip by using Cash Conversion Cycle (CCC) as a metric. The mathematical models for inventory bullwhip are developed for two-stage and generic multi-stage supply chains, and then by extending these inventory models, the CFB models are developed for two-stage. CFB predicted by the proposed mathematical models approximately differ 14% from detailed simulation models. We find that increasing variability increases inventory and cash-flow bullwhip along with lead time, whereas increasing the demand observation period has the opposite effect. The average marginal impact of the bullwhip effect on the CFB is approximately 20%. Additionally, the CFB is also an increasing function of an expected value of inventory and a decreasing function of an expected value of demand.

Original languageEnglish (US)
Pages (from-to)431-447
Number of pages17
JournalInternational Journal of Production Economics
Issue number1
StatePublished - Sep 2013

All Science Journal Classification (ASJC) codes

  • General Business, Management and Accounting
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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