What is the bullwhip effect?

Understanding the Bullwhip Effect:

The bullwhip effect occurs when small fluctuations in consumer demand lead to exaggerated changes in inventory levels up the supply chain.

Miscommunication or poor demand forecasting amplifies these effects, causing overproduction or stockpiling.

Why Other Options Are Incorrect:

Option B: Refers to supply chain optimization, which is unrelated to the bullwhip effect.

Option C: Describes the maker movement, not the bullwhip effect.

Option D: Describes the network effect, unrelated to supply chain dynamics.

References:

"The Bullwhip Effect in Supply Chain Management" – MIT Sloan

Supply Chain Dynamics and Bullwhip Effect – Harvard Business Review