Now Accepting Apple Pay

Apple Pay is the easiest and most secure way to pay on StudyMoose in Safari.

Example of Bullwhipp Effect

The Barilla company, a major pasta producer located in Italy provides a demonstrative of issues resulting from the bullwhip effect.

Get to Know The Price Estimate For Your Paper
Number of pages
Email Invalid email

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy. We’ll occasionally send you promo and account related email

"You must agree to out terms of services and privacy policy"
Check writers' offers

You won’t be charged yet!

Barilla offered special discounts to their customer who ordered full truckload of their goods. Such marketing deals created customer demand-patterns were highly peaked and volatile. The supply chain costs were so high that they outstripped the benefits from full truckload transportation.

The Barilla case was one of the first published cases that empirically supported the bullwhip phenomenon. The 5 major reasons leading to the bullwhip effect according to Lee: Demand signal processing is the is the practice of decision makers adjusting the parameters of the inventory replenishment rule.

Target stock levels, safety stocks and demand forecasts are updated in view of information or deviations from targets. Another major cause of the bullwhip problem is the lead-time, which is caused by two components.

The physical delays and also delays in cause of information. The lead-time is a key parameter to calculate safety stocks.

Get quality help now
Verified writer

Proficient in: Communication

4.7 (348)

“ Amazing as always, gave her a week to finish a big assignment and came through way ahead of time. ”

+84 relevant experts are online
Hire writer

The third bullwhip creator is the practice of order batching. Economies of scale in ordering, production set-ups or transportation will quite clearly increase order variability. The fourth major cause of bullwhip is highlighted by Lee has to do with price fluctuations. Price discounts and quantity discounts are often offered by retailers. So the retailers buy goods in advance and quantities and store them.

This do not reflect their immediate needs. The fifth cause of bullwhip is connected with rationing and shortage gaming. Inflated orders placed by supply chain occupants during shortage periods tend to boost the bullwhip effect. Possibilities to minimize the bullwhip effect (in order to avoid costs): improve communication in the supply chain simultaneousness of actions (therefore time delays and reaction times can be avoided) centralization of disposition establish strategic alliances reduce the variability

Cite this page

Example of Bullwhipp Effect. (2018, Sep 11). Retrieved from

👋 Hi! I’m your smart assistant Amy!

Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.

get help with your assignment