Bullwhip effect

The bullwhip effect (or whiplash effect) is an observed phenomenon in forecast-driven distribution channels. It refers to a trend of larger and larger swings in inventory in response to changes in demand, as one looks at firms further back in the supply chain for a product. The concept first appeared in Jay Forrester’s Industrial Dynamics (1961) and thus it is also known as the Forrester effect.

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thefourweekmbateam

Gennaro Cuofano, International MBA. Author of "The Enlightened Accountant," and "The Art of Mentorship."