Editing Beer distribution game (section)

==Bullwhip effect==
The [[bullwhip effect]] (or whiplash or whipsaw effect) is a well-known symptom of coordination problems in traditional supply chains. It refers to the role played by periodical order amounts as one moves upstream in the supply chain toward the production end.
Even when demand is stable, small variations in that demand, at the retail-end, tend to dramatically amplify themselves upstream through the supply chain. The resulting effect is that order amounts become very erratic. Very high one week, and then zero the next. The term was first coined around 1990 when Procter & Gamble perceived erratic and amplified order patterns in its supply chain for babies' diapers.  As a consequence of the bullwhip effect, a range of inefficiencies occur throughout the supply chain:<ref name=SCA />

* high (safety) stock levels
* poor customer service levels
* poor capacity utilization
* aggravated problems with demand forecasting
* ultimately high cost and low levels of inter-firm trust

While the effect is not new, it is still a timely and pressing problem in contemporary supply chains.
Generally, the reasons for the bullwhip effect are:<ref name=SCA />

* Order batching: Happens when each member in the chain orders more quantities than it needs, warping the original quantities demanded.
* Price fluctuation: Special discounts and cost changes can cause buyers to take advantage, resulting in irregular production and distorted demand.
* Demand information misuse: When past demand information for new estimates do not take into account fluctuations.
* Lack of communication: This can lead to constraints when processes are not run efficiently, this usually happens when organizations identify the product demand differently within different links of the supply chain.
* Free return policies: Customers may overstate demands due to shortages, if customers cannot return items, retailers will continue to exaggerate their needs, cancelling orders and causing in excess product or materials.