The bullwhip effect describes the tendency for larger order size fluctuations in the supply chain as orders move from retailers toward suppliers.

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The bullwhip effect is a well-known phenomenon observed in supply chains where slight fluctuations in consumer demand can cause amplified variations in order sizes as they propagate upstream in the supply chain, from retailers to manufacturers and suppliers. This occurs due to a lack of coordination and communication between various supply chain actors and the presence of inventory ordering policies that do not reflect actual demand fluctuations.

The Bullwhip Effect Describes the Tendency for Larger Order Size