Regulating Bullwhip Effect in Supply Chain with Hybrid Recycling Channels using Linear Quadratic Gaussian Controller

In this paper, discrete time dynamic model for four-level supply chain system, including factory, wholesaler, retailer, and customer is designed with a recovery center as recycling hybrid channels. Due to the lack of coordination of the chain level and the unhealthy exchange of information in the system, almost all supply chains dynamic involving the stochastic noise. For the first time, in this paper, we proved that stochastic noise lead to the bullwhip effect and we mitigated this phenomenon with control theory. Also, we investigate the effects of the lead time, the various forecasting methods, and aggressive ordering on the bullwhip effect. In order to mitigate the bullwhip effect, we propose Kalman filter method. So, using linear quadratic Gaussian controller, not only effect of bullwhip was adjusted but, also the system become stable. Eventually, the simulation results in Meshkin match factory, indicate the efficiency of the proposed method.