That fact that minor changes in customer demand can become exaggerated as thatdemand is communicated up that supply chain is referred to as:

The bullwhip effect is the specific, formally recognized term in supply chain management for the phenomenon where demand variability increases as one moves upstream in a supply chain. Minor changes in end-customer demand become amplified, leading to exaggerated orders for wholesalers, manufacturers, and raw material suppliers. This distortion is caused by factors such as demand forecast updating, order batching, price fluctuations, and rationing games. The term precisely describes the scenario of demand exaggeration as it is communicated up the supply chain.

A. embellished effect: This is not a standard academic or industry term used to describe demand variability in supply chain management.

B. amplification effect: While demand is amplified, "bullwhip effect" is the more precise and universally accepted technical term for this specific supply chain dynamic.

D. inflation effect: This is an economic term referring to the general increase in prices and has no direct relevance to demand signal distortion.

1. Lee

H. L.

Padmanabhan

V.

& Whang

S. (1997). The Bullwhip Effect in Supply Chains. Sloan Management Review

38(3)

93–102. The seminal paper defines the effect as the tendency for orders to have larger variance than sales

with this distortion propagating upstream.

2. Massachusetts Institute of Technology (MIT) OpenCourseWare. (2016). 15.762J Supply Chain Planning

Lecture 10: The Bullwhip Effect. MIT. Retrieved from https://ocw.mit.edu/courses/15-762j-supply-chain-planning-spring-2016/resources/mit15762js16lec10/. The lecture notes define the bullwhip effect as "The phenomenon that the variability of the orders is larger than that of the sales."

3. Chen

F.

Drezner

Z.

Ryan

J. K.

& Simchi-Levi

D. (2000). Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting

Lead Times

and Information. Management Science

46(3)

436–443. This IEEE-published journal article analyzes the causes and quantification of the bullwhip effect

reinforcing it as the correct academic term.