AUTHORS: Junhai Ma, Binshuo Bao

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ABSTRACT: The bullwhip effect is one of the main problems in supply chain management. The downstream retail price fluctuation is one of the major factors to cause the bullwhip effect. This paper investigates the impact of retail prices variability with a view to probability on the bullwhip effect in a two-echelon supply chain which is composed of one supplier and two retailers. With various probabilities to choose the price, we may simply quantify the relationship between the two prices. The order-up-to inventory policy and the moving average forecasting method are employed respectively by the two retailers. The effects of the price, the probability, the lead time, and the autoregressive coefficient on a bullwhip effect measure are shown finally. And we indentify on which condition the bullwhip effect is lessened based on the price sensitive demands

KEYWORDS: Complex Supply chain, Bullwhip effect, Covariance, Price Game, MA Forecasting Method

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