Analysis of the bullwhip effect with multi-echelon, multi-product supply chains

The bullwhip effect is a phenomenon in forecast-driven distribution channels, which is associated with a trend of larger and larger swings in inventory in response to changes in demand, as we look at firm further back in the supply chain for a particular product. This paper deals with the bullwhip effect in a multi-echelon multiple products supply chain with correlated market demands. The downstream retailer procures products from an un-capacitated upstream supplier to meet the correlated market demands of multiple products. This paper proposes a new method based on demand forecasting technique and uses a simple moving average to eliminate the bullwhip effect, which is proved to be effective under some circumstances.