The Bullwhip — Supply Chain Dynamics

The Bullwhip Effect

A 5% uptick at the checkout counter. By the time the signal reaches the factory, it looks like a 60% demand surge. Warehouses scramble. Lines halt. Then the over-order arrives — drowning everyone in excess inventory.

This is the bullwhip effect: demand variance amplifies at every tier. Information delays, safety-stock overreactions, and order batching turn small ripples into inventory tsunamis upstream.

Your Challenge

Keep inventory variance below 30% across all tiers for 8 consecutive turns
Avoid stockout at any tier (inventory < 10) — the chain breaks
Avoid 3× overstock at any tier (inventory > 300) — warehouse costs collapse margins

The Feedback Loops

R1 — Order amplification: Demand spike → retailer panic-orders → distributor over-orders → manufacturer floods factory
B1 — Inventory correction: Overstock → reduce orders → understock → panic-order again
D1 — Information delay: Demand signal takes 1–2 turns to reach each upstream tier
R2 — Safety stock spiral: Uncertainty → buffer stockpiling → amplified orders → more uncertainty

Default settings model a classic bullwhip crisis. Watch the amplification wave — upstream bars should never tower over downstream.

Supply Chain — Live Inventory

Consumer
Demand

50 ⚡ SHOCK

Retailer

Order: —

StockoutTargetOverstock

100

1-wk delay

Distributor

Order: —

StockoutTargetOverstock

100

2-wk delay

Manufacturer

Order: —

StockoutTargetOverstock

100

2-wk delay

Raw Materials

Order: —

StockoutTargetOverstock

100

Bullwhip Amplification Wave

System Metrics

Chain Stability

100

0 = broken · 100 = stable

Avg Variance

Target: <30%

Stable Weeks

Need 8 consecutive

Amplification

1.0×

Supplier / consumer ratio

Active Feedback Loops

Delay D1 Information Latency

Demand signals take 1–2 weeks to propagate upstream. Each tier orders based on stale data — the root cause of amplification.

R1 — Reinforcing Order Amplification

Demand spike → retailer panics → distributor over-orders → manufacturer floods factory. Each tier amplifies the last.

B1 — Balancing Inventory Correction

High inventory → reduced orders → depleted stock → panic-order. Correction loops create oscillation, especially with delays.

R2 — Reinforcing Safety Stock Spiral

Uncertainty → larger safety stock → larger orders → larger swings. Information sharing breaks this loop.

The Bullwhip Effect

Your Challenge

The Feedback Loops

Supply Chain Stabilized