Bullwhip effect refers to a phenomenon in which demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain.

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The bullwhip effect describes how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels. This is due to several factors including order batching, price fluctuations, demand forecasting, and lead times.

Bullwhip Effect Refers to a Phenomenon in Which Demand Variations