The behavioural causes of bullwhip effect in supply chains: A systematic literature review

The bullwhip effect, also known as demand information amplification, is one of the principal obstacles in supply chains. In recent decades, extensive studies have explored its operational causes and have proposed corresponding solutions in the context of production inventory and supply chain systems. However, the underlying assumption of these studies is that human decision-making is always rational. Yet, this is not always the case, and an increasing number of recent studies have argued that behavioural and psychological factors play a key role in generating the bullwhip effect in real-world supply chains. Given the prevalence of such research, the main objective of this study is to provide a systematic literature review on the bullwhip effect from the behavioural operations perspective. Using databases, including Scopus, Wiley Online Library, Google Scholar and Science Direct, we selected, summarised and analysed 53 academic studies. We find that most studies build their models and simulations based on the ‘beer distribution game’ and analyse the results at the individual level. We also demonstrate the importance of studying human factors in the bullwhip effect through adapting Sterman's double-loop learning model. Based on this model, we categorise and analyse the behavioural factors that have been studied and identify the explored behavioural factors for future research. Based on our findings, we suggest that future studies could consider social and cultural influences on decision-making in studying the bullwhip effect. In addition, further aspects of human mental models that cause this effect can be explored.