Operations Management · 1997
Information Distortion in a Supply Chain: The Bullwhip Effect
Hau L. Lee, V. Padmanabhan, Seungjin Whang
Management Science
The research approach
Analyzes how demand signals, rationing incentives, order batching and price changes distort ordering information as it travels upstream through a supply chain.
What the research finds
Order variability can exceed sales variability and increase upstream, misleading inventory and production decisions when orders are treated as accurate demand signals.
Why it matters for management
Frames operations management discussions about forecasting, coordination and information sharing when organizations introduce automated purchasing or intelligent supply chain systems.
Scope & limitations
The identified mechanisms do not supply a universal estimate of amplification or imply that every supply chain experiences the same degree of distortion.
