Measuring the bullwhip effect in supply chains with a vector autoregressive demand process

In this paper, we study the bullwhip effect problem in a two-echelon supply chain, which includes two products according to our assumptions. The main aim of the paper is to provide a measure for bullwhip effect that enables the analysis and reduction of this phenomenon in supply chains with two products. VAR (1) time series, a suitable pattern for demand modeling in a two product supply chain is utilized. The use of a simple moving average method for lead-time demand forecasting, and OUT ordering policy are due to their wide range application in the real world. A general form of bullwhip measure has been derived and demonstrated to prove that an explicit expression for bullwhip effect measure does not exist based on the present approach on the bullwhip measure. However, the bullwhip effect measure may still exist in limited cases. A/the Condition in which a bullwhip effect can be removed is described, and finally, the bullwhip effect in a two-product supply chain is demonstrated via a numerical example.