Distortion of Demand: Bullwhip Effect:

 "Distortion of demand" along the supply-chain is a common problem. Numerous researchers have explained this problem (Lee et al. 1997). Whereas explaining the law of industrial dynamics, Burbridge (1984) postulated that the variation in demand for product enhance as it passes through a series of transfers in a supply-chain, and stock-control ordering is utilized.

Several authors have described "bullwhip effect" or "flywheel effect" in the supply-chain. Uncertainly in economy, market being in-and-out of recession, tendency of management to over-react to periodic economic swings, which are very common, and making a safety-net in material planning are few cause for "amplification of demand" in a supply-chain .The effect of amplified demand-distortion is evident in a factory (factory E), which is a down-stream link of the chain. This effect in modern supply chain literature is called as Bullwhip Effect. It represents the enhancement in the variability of demand, as we move up the supply chain from the retailer to the distributor to the manufacturer to the suppliers. The effects of "Bullwhip effect" are as follows :

• More stock-outs
• enhanced inventory
• Overtime production and idle production scheduling
• Excessive or insufficient capacity
• Poor customer service because of unavailable products
• Expedited shipments, etc.