In this paper, an alternative inventory policy that trades off the bullwhip effect at an upstream facility with cost minimization at a current facility, with the goal of reducing system wide total expected inventory costs, when external demand distributjon is autocorrelated, is considered. The alternative inventory policy has a form that is somewhere between one that completely neglects the autocorrleation and one that actively utilizes the autocorrelation. For this purpose, a mathematical model that allows us to evaluate system wide total expected inventory costs for a periodic review system is developed. This model enables us to identify an optimal inventory policy at a current facility that minimizes system wide total expected inventory costs by the best tradeoff of the bullwhip effect at an upstream facility with cost minimization at a current facility. From numerical experiments, it has been found that (i) when the autocorrelation is negative, the optimal policy is one that actively utilizes the autocorrelation, (ii) when the autocorrelation is small and positive, the optimal policy is one that neglects the autocorrelation, and (iii) when the autocorrelation is large and positive, the optimal policy is somewhere between one that actively utilizes the autocorrelation and one that neglect the autocorrelation.

Recently, corporate environment is faced with uncertainty that did not suffer in the past. In addition, as the supply chain was expanded and lengthened, the flow of information and material was complicated. Increase in complexity which amplifies the variability of the individual steps in supply chains further adds to the uncertainty. The bullwhip effect that refers the phenomenon where order variability increases as the orders move upstream in the supply chain became serious. The bullwhip effect is more and more important especially for the enterprise in the supply chain. So, there are many studies now since it was observed about 100 years ago. The aim of this paper is to analyze how to solve the bullwhip effect by using TRIZ (Teoriya Resheniya Izobretatelskikh Zadach). TRIZ is one of the most famous tools for creative solving that applied in many fields ranging from management as well as engineering. Among problems, the dilemma needs creative solutions that require handling the contradictions inherent in that. Among various kinds of problem solving techniques, TRIZ provides the concept of physical contradiction as a common problem solving principle. This study provides a simple process of solving problem explains a case of solving problem in the management field and shows the availability of theory in the inventory control. In accordance with the proposed solving process, the paper analyzes the bullwhip effect by applying the TRIZ tools and then identifies the solution directions. Next, the current studies are classified by the above analysis and important managerial concepts are proposed. Lastly, directions for future research on this area are suggested.

The bullwhip effect is known as the significant factor which causes unnecessary inventory, lost sales or cost increase in supply chains. Therefore, the causes of the bullwhip effect must be examined and removed. In this paper, we develop two analytical to