The following is the result of a study conducted in 1998 by a large vertically integrated electronics manufacturer to understand the causes and contributing factors that create demand signal amplification in a supply chain. The approach used was:
- Develop a simple 3 node supply chain model using Optima (TM).
- Validate the model by seeing if it can mimic the behavior in our current system.
- Determine by experimenting on the model: a) The root causes of the bullwhip. b) The critical factors that contribute most to demand amplification.
- Test alternative demand linkage strategies for MRP and JIT coupled systems.

By understanding this phenomenon we hoped to either redesign the way demand is signaled through the supply chain or put in compensating controls to reduce the amplification.