A retailer notices a small increase in customer purchases and orders double the amount from the distributor. The distributor then orders triple from the manufacturer. This scenario is an example of:

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A retailer notices a small uptick in customer purchases and, in response, orders double the amount from the distributor. The distributor, seeing this larger order, then orders triple from the manufacturer. This pattern shows how small changes at the consumer level can be amplified as they move upstream through the supply chain, creating increasingly larger orders.

Option 1: Supply chain integration. This term refers to coordinating and aligning processes, information, and decisions across organizations in a supply chain to improve performance. While integration can help reduce inefficiencies, it does not by itself describe the amplification of orders seen here.

Option 2: Bullwhip effect. This phenomenon occurs when small fluctuations in customer demand cause progressively larger fluctuations in orders placed upstream, due to factors like demand forecasting, order batching, price fluctuations, and lead times. The scenario exactly illustrates this upward amplification.

Option 3: Postponement. Postponement is a strategy where final customization or product differentiation is delayed until the latest possible stage to reduce risk and inventory. It does not explain the increasing order sizes upstream in this case.

Option 4: Efficient supply chain design. While an efficient design aims to optimize flow and inventory, it does not inherently describe the dynamic of distorted demand signals propagating and magnifying up the chain. The described behavior is a classic example of the bullwhip effect, not just general efficiency.

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A retailer notices a small increase in customer purchases and orders double the amount from the distributor. The distributor then orders triple from the manufacturer. This scenario is an example of:

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