Many companies have enjoyed a significant success due to the unique ways in which they have organized their supply chains, which are one of the best ways to compete in today's marketplaces. For make-to-stock production systems the production plans and activities are based on demand forecasting. This is one of the key causes of the bullwhip effect. The bullwhip effect (BE) is the inherent increase in demand fluctuation up the supply chain. In the paper we experimented (by simulating) with a special case of a simple three-stage supply chain using seasonal and deseasonalized time series of the market demand data in order to identify, illustrate and discuss the impacts of different level constraints on the BE. The results are presented for different overall equipment effectiveness (OEE) and constrained inventory policies. At higher OEE level there is less variability in production processes, but at inventory limitations the impact is more complex.

During an aggravated economic situation many companies have to deal with various situations that present demand distortion and changes in production processes. As a result orders to suppliers fluctuate upstream of the supply chain in amplified form. This phenomenon is called the bullwhip effect, which is one of the more interesting and developing problems within supply chain management. This undesirable effect produces excess regarding inventory, problems during production planning and poor customer services. In this paper we experimented with two special cases in a simple four stage supply chain with the level constraints represented by the overall equipment effectiveness (OEE) level: Case 1-stable demand with single 5 % change and ideal OEE level, and Case 2-stable demand with single 5 % change and OEE level changes upstream of the supply chain. The results of spreadsheet simulation are shown in the tables and charts. The impact of slight demand distortion and level constraints within the supply chain on the bullwhip effect was evident. The comparison of the results showed that when deviations in production processes are present the higher bullwhip effect occur at different stages within the supply chain and depending on the situation do not have to occur at stages within the supply chain with the lowest OEE levels.

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