The bullwhip effect occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain.

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The bullwhip effect refers to the phenomenon where variations in demand at the consumer end of a supply chain are amplified as they move back through the supply chain, causing larger and larger swings in inventory levels at various stages of the supply chain. This distortion in demand information can lead to inefficiencies such as excessive inventory, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedules.

The Bullwhip Effect Occurs When Distorted Product-Demand Information Ripples from One