"The Bullwhip Effect in Supply Chains" (academic paper)

The Bullwhip Effect in supply chains occurs when small changes in consumer demand lead to larger and larger fluctuations in inventory levels at different stages of the supply chain. For example, if consumers buy more of a product, retailers will order more from suppliers, who then produce even more to meet that demand. This can cause inefficiencies, such as overproduction or stockouts, as each entity reacts to perceived demand without accurate information. Ultimately, the Bullwhip Effect can lead to increased costs and operational challenges for businesses trying to match supply with consumer needs.