A b s t r a c tThis chapter studies supply chain demand propagation in an ERPintegrated manufacturing environment, where item demands are interrelated by their assembly structure. The integrated planning environment is commonplace in industries such as automotive and electronics, where detailed production and material requirements decisions are communicated electronically between facilities and then refreshed frequently. While tightly integrated supply chains have clear benefits, distortion can occur in the demand signals between the facilities that assemble end-items and those that manufacture sub-assemblies and components. Using both analytical and empirical tools, we explore an ERP model using basic lot-sizing logic under fairly general settings. We examine key factors that influence demand variation in the assembly supply chain, assess their effects, and develop insight into the underlying supply processes. We find that (1) order batching by downstream facilities plays a principal role in upstream demand amplification, (2) the commonly used schedule release policy in ERP systems may cause unnecessary nervousness in the supply chain, (3) the interplay of component shar-