Analysis of the Effect of Demand Variables and Safety Stock on Costs and Bullwhip Effect of the Supply Chain

In recent decades, encountering the phenomenon of bullwhip effect has been included as the most important problems in supply chain management. This phenomenon indicates that the fluctuation of the demand variation increases from the end to the outset of the chain. In this research, the study of the buffer stock and demand variation of the final customer effects on the Bullwhip effect and total costs of supply chain. is discussed Then, a liner four-level supply chain including store, retailer, wholesaler and factory is considered and the moving average procedure is used in order to forecast the demands. Subsequently, nine different scenarios, including demand variation (low, moderate, high) and buffer stock (low, moderate, high) are considered; and the bullwhip effect was computed with 95% confidence interval and one year period. In addition, total costs, including the ordering, maintenance and lag costs are computed, each of which is a member of the supply chain. These research results indicate that, if the demands of all members of the supply chain are estimated using the moving average, by increasing the variation fluctuation of the final customer demand, bullwhip effect will increase from downstream to upstream in supply chain but the total bullwhip effect will decrease. Also, if the demand variation is supposed stable, increased buffer stock in each of the supply chain members will cause increased bullwhip effect of total supply chain. Increased bullwhip effect is followed by increased costs and the share of the ordering cost will decrease and the share of the maintenance and lag costs will increase