The "whiplash effect" is a graphic description of the distorted transmission of demand information in the supply chain.

The basic idea is that when each node in the supply chain makes production or supply decisions based only on demand information from its neighboring subordinate enterprises, the inaccuracy of demand information will flow upstream along the supply chain, resulting in the phenomenon of amplification step by step.

There are six main reasons for the "whiplash effect", i.e., demand forecast revisions, order lot size decisions, price fluctuations, shortage gaming, imbalance in inventory responsibility, and coping with environmental variability.

Background

The earliest person who noticed this amplification of demand fluctuation in the supply chain was J. Forrester, who analyzed a three-phase, four-node supply chain as early as 1961 according to the system dynamics theory and pointed out that, for seasonal commodities, the demand changes that the manufacturer perceived far exceeded the demand changes of the customer. variation far exceeds that of the customer, and that the structure, strategy and interactions within the supply chain are responsible for the amplification of the demand variation.

Sterman designed the classroom game "Beer Game" (1989), and from the study of human behavior, he believed that the decision maker's misunderstanding of the feedback information is the main reason for this phenomenon. four reasons leading to the bullwhip effect and proposed a quantitative model and method of the bullwhip effect.