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The authors suggest several ways in which companies can counteract the bullwhip effect. Companies can make demand data from downstream available upstream.Or they can bypass the downstream site by selling directly to the consumer.However, when they examined the orders from the reseller, they observed much bigger swings.Also, to their surprise, they discovered that the orders from the printer division to the company’s integrated circuit division had even greater fluctuations.
While the consumers, in this case, the babies, consumed diapers at a steady rate, the demand order variabilities in the supply chain were amplified as they moved up the supply chain. (In some industries, it is known as the “whiplash” or the “whipsaw” effect.) When Hewlett-Packard (HP) executives examined the sales of one of its printers at a major reseller, they found that there were, as expected, some fluctuations over time.
Big variations in demand were a major problem for HP’s management.