This paper presents a system dynamics (SD) approach for the analysis of the demand amplification problem, also known as the bullwhip effect, which has been studied fairly extensively in the literature. The construction of an SD model is reported using a part of a supermarket chain system in the UK as an example. Based on the model, the causes of the dynamic behaviour of the system and the sources of amplification from the downstream to the upstream of the chain are investigated. The impact of information delays, demand forecasting and information sharing on the performance of the multi‐echelon supply chain is analysed. Some implementation issues are also addressed based on the simulation analysis.
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Ge et al. (2004) studied this question.
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