BULLWHIP EFFECT IN SUPPLY

CHAIN
ASHISH AGGARWAL
41710027
What is Bullwhip effect?
The bullwhip effect is a distribution channel phenomenon in which forecasts
yield supply chain inefficiencies.
It refers to increasing swings In inventory in response to shifts in customer
demand as one moves further up the supply chain.
The concept first appeared in Jay Forrester’s Industrial Dynamics (1961) and thus
it is also known as the Forrester effect.
The bullwhip effect was named for the way the amplitude of a whip increases
down its length. 
 Causes Countermeasures

Price discounts causes short term increase in sales, which gives Every day low price.
false signal of long term demand increase.

Order batching is placing large orders to minimize processing Frequent orders of small size.
and transportation cost.

Shortage gaming is placing extra orders when there is gap Allocate based on past history. For ex: allocate volumes to sales
between demand vs supply. region based on history.

Forecast inaccuracy is caused by improper visibility of demand Strong information sharing network can solve this.
across chain.