Impact of demand forecasting on information distortion (bullwhip) in supply chains

SUMMARY IMPACT OF DEMAND FORECASTING ON INFORMATION DISTORTION (BULLWfflP) IN SUPPLY CHAINS Kazım SARI In this thesis, we study a phenomenon termed "bullwhip effect" which states the systematic distortions in demand information as it passed along the supply chain in the forms of orders. We report the various researchers' findings about the impact of bullwhip effect on the performance of a supply chain, causes of the bullwhip effect, and strategies developed to eliminate this phenomenon. Furthermore, we study the impact of an optimal forecasting policy under the demand process with linear trend and seasonal swings on the bullwhip effect. The results indicate that increase in bullwhip effect will be greater for longer lead times. In addition, to reduce the bullwhip effect level components smoothing parameter (a) and trend components smoothing parameter( /? ) should be selected small, while seasonal components smoothing parameter (y) is large Keywords : Bullwhip Effect, Supply Chain Management, Information Distortion VII