Essay on Management Principles and Operational Contexts
The ‘Forrester’ or effect, suggests that demand variability increases as one moves up a supply chain. Should a customer change the order quantities for a product before the close of the planning period, these deviations from the forecast often cause a mismatch with what their distributors have planned to order from manufacturers. As such, the distributors will increase their orders from the manufacturers, and add in extra contingency to ensure they can cope with any further increases. The manufacturers will, in turn, increase their planned production, and raw material orders, to what is needed to meet the amended orders, with extra contingency.
