Bullwhip Effect

The bullwhip effect is the observation that a small change in demand can lead to much larger changes down the supply chain. Just like a small flick of the wrist can make a whip crack, a small change in consumer behavior is magnified at the supplier level, magnified again by their suppliers, and again down the line.

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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