A circular reference exists when the connections among the tables simulate a circle and we have two routes to get from any given point to another. Suppose there are three tables A, B, C.
A has Vendor, Country and State
B has Vendor, City and Area.
C has Country, Street and Area.
So if you wish to find City Information for Table A. There are 2 Ways. Either through direct linkage of A and B, as they have Vendor in Common. Or Through route of A - C then C- B(A and C have country in common, and C and B have Area is common). Hence A - B, A - C and B - C are connected, this forms a circle, and cause severe data inconsistency problems, performance issues etc. Hence this should be avoided.
Regards
Pankaj
