The Impact of Exponential Smoothing Forecasts on the Bullwhip Effect

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

View graph of relations

Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)269-286
Journal / PublicationNaval Research Logistics
Volume47
Issue number4
StatePublished - Jun 2000
Externally publishedYes

Abstract

An important phenomenon often observed in supply chain management, known as the bullwhip effect, implies that demand variability increases as one moves up the supply chain, i.e., as one moves away from customer demand. In this paper we quantify this effect for simple, two-stage, supply chains consisting of a single retailer and a single manufacturer. We demonstrate that the use of an exponential smoothing forecast by the retailer can cause the bullwhip effect and contrast these results with the increase in variability due to the use of a moving average forecast. We consider two types of demand processes, a correlated demand process and a demand process with a linear trend. We then discuss several important managerial insights that can be drawn from this research. © 2000 John Wiley & Sons, Inc.

Research Area(s)

  • Bullwhip effect, Correlated demand, Exponential smoothing, Forecasting, Information distortion, Linear trend demand process, Moving average, Supply chain management

Citation Format(s)

The Impact of Exponential Smoothing Forecasts on the Bullwhip Effect. / Chen, Frank; Ryan, Jennifer K.; Simchi-Levi, David.

In: Naval Research Logistics, Vol. 47, No. 4, 06.2000, p. 269-286.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review