Applying Goldratt's Theory of Constraints to reduce the Bullwhip Effect through agent-based modeling.

TOC versus order-up-to inventory policy comparison using the 'Beer Game' scenario.KAOS methodology used to devise the multi-agent simulation model.Robust SW engineering and TDD techniques used to build the model.Bottleneck managed through DBR methodology, placing the drum at the shop retailer.TOC philosophy leads the supply chain to a significant decrease of Bullwhip Effect. In the current environment, Supply Chain Management (SCM) is a major concern for businesses. The Bullwhip Effect is a proven cause of significant inefficiencies in SCM. This paper applies Goldratt's Theory of Constraints (TOC) to reduce it. KAOS methodology has been used to devise the conceptual model for a multi-agent system, which is used to experiment with the well known 'Beer Game' supply chain exercise. Our work brings evidence that TOC, with its bottleneck management strategy through the Drum-Buffer-Rope (DBR) methodology, induces significant improvements. Opposed to traditional management policies, linked to the mass production paradigm, TOC systemic approach generates large operational and financial advantages for each node in the supply chain, without any undesirable collateral effect.