The bullwhip effect:
Understand the Problem
The question is asking about the bullwhip effect and its impact on supply chain performance and relationships between different stages. You need to choose the option that accurately describes the effect of the bullwhip effect.
Answer
The bullwhip effect is when small demand fluctuations at the retail level cause larger fluctuations upstream in the supply chain.
The bullwhip effect is a supply chain phenomenon where small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand upstream (from retailers to manufacturers). This distortion of information leads to increased volatility and inefficiencies in the supply chain.
Answer for screen readers
The bullwhip effect is a supply chain phenomenon where small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand upstream (from retailers to manufacturers). This distortion of information leads to increased volatility and inefficiencies in the supply chain.
More Information
The bullwhip effect can lead to increased costs, excess inventory, and poor customer service. It is also known as the Forrester effect.
Tips
A common mistake is to think the bullwhip effect only impacts manufacturers. It impacts all members of the supply chain.
Sources
- Bullwhip Effect: Meaning, Example, Impact - Investopedia - investopedia.com
- What is the Bullwhip Effect? | Definition from TechTarget - techtarget.com
- Understanding the Supply Chain Bullwhip Effect - TrueCommerce - truecommerce.com
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