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Then the variation makes more problems like excessive inventory, poor customer service, uncertainty production planning, and high costs for corrections. This distorted information that is happened led every entity in the supply chain to stock pile. Because, the ordering pattern is commonly the upstream sites are always greater than those on the downstream site. This why the company need to first understand what creates the bullwhip effect so they can counteract it.
Cause of bullwhip effect may cause by human behavior, such as misconception about inventory and demand information. However the article says it in contrast, that it is cause by consequence of the player’s rational behavior within the supply chain’s infrastructure...
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