The Bullwhip effect is a well-known phenomenon, which affects the supply chain management process. It produces variations in a customer's demand pattern, which amplify as they pass through the production, supply and distribution processes. The deviation gets amplified upstream at each level of the chain, in the form of replenishment orders. Forrester stated that the amplification is due to problems arising from non-zero lead times and inaccurate forecasting made by each member of the chain in the face of demand variability. This paper analyzes the effect of the fluctuation in lead times due to transportation (delivery times) on the distortion of replenishment/manufacturing orders generated by each member of a traditional supply chain, and the impact of that distortion on fill rate, inventory costs and transportation costs, by using a dynamic simulation model for the management of the demand in multilevel supply chains.

The high competitiveness in the current economic environment, together with the effects of globalization, are forcing the industry to find new ways of interaction to satisfy customers' demand. In a supply chain, manufacturers, distributors, carriers, suppliers and public organizations collaborate to deliver goods promptly and efficiently so that money can flow through the economic system. An optimized supply chain is the result of improvements in efficiency which can reduce inventory needs, save transportation costs and other distribution expenses, and streamline the time to market.

When Forrester (1958) analyzed a traditional supply chain, he observed that a small variation in a customer's demand pattern is amplified as it flowed through the production, supply and distribution processes and that this deviation is amplified upstream at each level of the chain in the form of replenishment orders. According to Forrester, the amplification was due to the problems arising from non-zero lead times and inaccurate forecasting made by each member of the chain in the face of demand variability. Some decades later, Lee et al. (1997a) identified that demand distortion relative to sales caused by the Forrester effect became even more amplified because of the following factors, which can be simultaneously present in the supply chain: order batching, product price fluctuations, rationing and shortage of finished products. The amplification of variance in product demand resulting from the conjunction of these four elements, amplification which increases as we move from end consumer along the supply chain, is called the Bullwhip effect.

The effect of the fluctuation in lead times is due to transportation (delivery times), on the distortion of replenishment/manufacturing orders generated by each member of a traditional supply chain (made up of manufacturer, wholesaler, retailer and end customer) and the impact of that distortion on fill rate, inventory costs and transportation costs of the modeled chain, is analyzed in this paper by using the dynamic simulation model for the management of the demand in multilevel supply chains proposed by Campuzano (2006).

Supply Chain Management Journal, Bullwhip Effect, Globalization, Public Organizations, Economic Systems, Inventory Control Policy, Strategic Decisions, Collaborative Strategies, Inventory Costs, Supply Chain Costs, Simulation Models.