Bullwhip Effect Analysis in Supply Chain for Demand Forecasting Technology

On the basis of the AR(1) stochastic process model for consumer demand which was introduced by Professor H.L. Lee, qualified and simulation model of bullwhip effect are established when order-up-to inventory policy is employed, which investigate demand variability caused by forecasting technology, such as moving average (MA) method, exponentially weighted moving average (EWMA) method or mean square error-optimal (MSE-optimal) forecasting method. The influence of forecasting methods on bullwhip effect are also analyzed, and carried out rules decreasing the bullwhip effect for employing MA, EWMA or MSE-optimal forecasting scheme.