To compete successfully in today's marketplace, it has become apparent that success cannot rely solely on improving the efficiency of internal operations, and that collaboration with trading partners can build the foundation for a competitive advantage and substantially improve the bottom line. Companies need to efficiently manage the activities of design, manufacturing, distribution, service and recycling of their products, and services to their customers. The coordination and integration of these flows within and across companies are critical in effective supply chain management (SCM). Demand management is critical in a supply chain involving multiple companies. Often, supply chains are subjected to information distortion as demand information is processed and passed on from one part of the chain to another. The propagation of demand variability up the supply chain, a phenomenon in the industrial world known as the "bullwhip" or "whiplash" effect, is a subject of research interest. In this paper, first, we define a two-stage supply chain model (a retailer and a supplier). Based on the results of simulations, we identify the factors which affect the degree of the bullwhip effect. As a result, we noted that the factors affecting the bullwhip effect are lead time, level of safety stock, and length of period to calculating moving average, whereas demand average and variance do not. Furthermore, when one of the above factors varies, decision makers may alter other factors to adjust to the change. Here, we also investigate how such decisions affect the degree of the bullwhip effect.
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