The Bullwhip Effect: Recognizing the Phenomenon and Mitigating It Using the Theory of Constraints Illustrated by a Case Study from British Petroleum
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Many companies experience reoccurring problems that seem to grow increasingly worse throughout time. Attempts to fix these problems may prove temporary. These efforts are usually directed towards the symptom of the problem instead of the core problem, creating a cycle as the result of the bullwhip effect. This thesis introduces the phenomenon from academic approach and includes a business element via a case study and discussion of the Theory of Constraints. The opening section includes a definition of the effect and its four causes referred to throughout the text. The next section involves the environment, or a multi-variable system, where the phenomenon occurs. Following is a case study derived from observations of British Petroleum first-hand. Last, tools from the Theory of Constraints are introduced as one approach to mitigating the bullwhip effect.