Study of the Bullwhip Effect under Various Forecasting Methods in Electronics Supply Chain with Dual Retailers considering Market Share

Abstract

We establish in this paper a new two-stage supply chain with one manufacturer and two retailers which have a fixed market share in the mature and stable market with specific reference to consumer electronics industry. This paper offers insights into how the three forecasting methods affect the bullwhip effect considering the market share under the ARMA(1,1) demand process and the order-up-to inventory policy. We also discuss the stability of the order with the theory of entropy. In particular, we derive the expressions of bullwhip effect measure under the MMSE, MA, and ES methods and compare them by numerical simulations. Results show that the MA is always better in contrast to the ES for reducing the bullwhip effect in our supply chain model. When moving average coefficient is lower than a certain value, the MMSE method is the best for reducing the bullwhip effect; otherwise, the MA method is the best. Moreover, the larger the market share of the retailer with a long lead time is, the greater the bullwhip effect is, no matter what the forecasting method is.