A simulation method based on upper bound method is developed in order to characterize forging characters in forging of spur gears. In this paper, utilizing a kinematically admissible velocity field and applying it to investigate the effect of inner diameter of holow billet. In the analysis, to predict the variation of inner diameter of hollw billet, neutral surface has been introduced. The neutral surface of each step is assumed as a circle and determined in order to have minimum forging energy by golden section method. By this method, the variation of inner diameter of billet during spur gear forging is successfully predicted. As a result, the selection of inner diameter of initial billet is very important to reduce the forging load.