Bullwhip - Forester Effect

Research Paper (postgraduate) from the year 2011 in the subject Business economics - Supply, Production, Logistics, grade: 9,5 of 10, Griffith University (MBA), course: Strategic Supply Chain Management, language: English, abstract: The phenomenon where orders to the supplier tend to have larger variance than sales to the buyer (i.e. demand distortion), and the distortion propagates upstream in an amplified form (i.e. variance amplification)¿ is a simple yet precise definition of the bullwhip effect. With this definition as a reference point I will in this assignment investigate the bullwhip effect. Supply network costs account for a significant proportion of a company¿s costs. On average supply network costs in a pharmaceutical company is 9% of total costs and in supply companies on average 15%. We see significant differences, up to 12%, between ¿best in class¿ companies and the average company.