Explain the bullwhip effect? What can be done to reduce the bullwhip effect? Give an example of how ...

a . The bullwhip effect is a build-up of safety stocks due to poor forecasting and communication that cause order quantities to be increased throughout the supply chain. The increases become amplified as the product continues farther down the supply chain. This will likely cause overstock and excess costs for each firm in a supply chain.
b. Better communication between each link in the supply chain and sharing of upcoming demand forecastsmakes it easier for companies to feel confident about their order quantity. Trading partners feel more comfortable with manufacturers who consistently produce high quality products. Firms feel more confident and have better working relationships with manufactures that have better products and better services. Better working relationships lead to single source for supplies and this helps the manufacturer plan for demand.
c. Example of the bullwhip effect  Company A sells widgets to customers. Actual demand from customers is 20 widgets. Company A orders 25 widgets from the distributor B; an extra 5 units are to ensure they don't run out of floor stock. Distributor B wants to order in bulk to save costs so they order 30 widgets from supplier C. Supplier C always keeps safety 20 stock on hand so it orders 36 widgets from Manufacturer D. At Manufacturer D's factory, they must produce in runs of 50 . Now 50 units have been produced for a demand of only 20 units causing each firm in the supply chain excess costs.