Bullwhip Effect

Bullwhip Effect refers to a phenomenon wherein small changes in consumer demand for a product at the retail stage can cause exponentially larger changes in the demand experienced by other members of the supply chain. This happens due to errors in forecasting demand across the supply chain of a product.

The increase in consumer demand for a product can cause retailers to order more of it from wholesale sellers, who in turn might order even more from manufacturers, and so on. The idea was first proposed by American computer scientist Jay Wright Forrester in his 1961 book Industrial Dynamics.