La Belle Inc.introduced a new line of accessories for teenaged girls last season.Following its immense popularity with the targeted group,the company anticipated high sales this season.It ordered raw materials accordingly,and even ensured that they had sufficient inventory to meet excess demand,if any.However,the success of the new line turned out to be a fad,as the teens soon turned to other products offered by competing brands,and La Belle's sales declined.This forecasting error caused a huge discrepancy in the amount of raw materials they needed and the amount of inventory they had already piled up in anticipation of good sales.This is an example of ________.

Question

Quizplus · Accepted Answer

This situation describes the bullwhip effect, which occurs when a small fluctuation in consumer demand leads to increasingly larger fluctuations as the demand information is transmitted upstream in the supply chain. In this case, La Belle Inc. overestimated demand based on a short-lived fad, causing them to order too many raw materials and build up excess inventory.