Causes And Consequences Of The Bullwhip Effect

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The bullwhip effect is a supply chain phenomenon in which in-appropriate forecasts yield supply chain inefficiencies. It increases swings in inventory management and shifts the customer demand further up (amplification) the supply chain resulting in the surplus production of the product or services. India is a country of festivals; this is also the mood of buying in the country. Shopping does not happen round the year but is very sensitive to patterns of the deep rooted culture. This makes job of the retail business executives little tough to plan and manage the stocks and required quantity at the right time and place. The basic character of the business is thus complicated and this complication is out of reach of human boundaries. Given the situation the efficiency is compromised, which can only be improved with help of Information Technology ads. All big and small brands like Apple, Woodland, Sony, Fossil and Samsung across various product categories put up their resources on sale, shoppers will be spoilt for choice. This is what contributes to ‘bullwhip effect’ in supply chain. Bullwhip effect leads to severe consequences such as low service level, stock outs, extra transportation and capacity costs. Lee et al. (1997) identified five operational causes of bullwhip effect: “demand signal processing, lead-time, order batching, price fluctuations, rationing and shortage gaming”. Shaban A (2015) has concluded in his research paper that “The bullwhip effect can be

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