Bullwhip effect in demand forecasting and processing based on optimal forecasting technology

In this paper a two-stage supply chain consisting of a single retailer and a single manufacturer is presented,within which the problem of bullwhip effect produced in demand forecasting and processing owing to different forecasting technologies is studied.The paper proves that with AR(1) process for the end demand,if retailer adopts moving average or exponential smoothing to forecast the non-zero lead time demand,then bullwhip effect in demand forecasting and processing will occur;if retailer adopts the optimal forecasting method,then bullwhip effect will occur conditionally.The supply chain mode is further extended to study the upstream demand mode,for which it is proved that the bullwhip effect is not always amplified under different forecasting technologies.