The Bullwhip effect is a phenomenon in which demand changes at the end of a supply chain, leading to inventory fluctuations. Generally, slight variations in demand at the customer or retailer level reverberate up the chain, causing more significant discrepancies.

This, in turn, causes too many or insufficient supplies to be purchased at each level of the chain. These products often end up as dead stock on backorder or need to have their prices cut to avoid a total loss.

Consider the following examples:

Let's say you are a food wholesaler who regularly sells $1,000$ cans of tuna to a customer each week. One of these days, this customer orders double the amount of tuna they normally do$.$

A retailer, at the beginning of the Easter holidays, gets a $25\%$ increase in orders of ice creams from neighbouring customers. The next day, the order increases to $40\%$ of the normal orders.