Bullwhip Effect Reduction Using Vendor Managed Inventory (VMI) Method in Supply Chain of Manufacturing Company

Abstract

Prediction of the amount of production can be done by forecasting demand and using appropriate methods. The supply chain studied at ABC company consists of manufacturing (vendors) and sales offices. Initially forecasting is done at each level of the supply chain with different forecasting methods. Therefore, uniform forecasting methods are needed for each supply chain actor. Based on testing the forecasting method conducted, the Winter’s Method. The model is used to link forecasting and implementation using the Vendor Managed Inventory (VMI) approach. Inventory planning in the supply chain cannot be done individually and must be thought of as a coordinated system. Inventory control is done by using the optimal lot calculation, namely Economic Order Quantity (EOQ). Based on demand forecasting and optimal lot determination, it can be calculated the value of the Bullwhip effect that occurs after the use of VMI in the supply chain has changed from 1.359 to 0.514 at the Manufacturing level.