If the variance of orders of a manufacturer equals 800, and the variance of orders of its supplier equals 850, what is happening at this part of the supply chain?
A) The bullwhip effect is present.
B) The supplier is providing a dampening (anti-bullwhip) effect.
C) The bullwhip measure for the supplier equals 1.067
D) Neither amplification nor smoothing is present.
E) Both amplification and smoothing are present.

Question

Quizplus · Accepted Answer

The bullwhip effect is present because the variance of the supplier's orders (850) is greater than the variance of the manufacturer's orders (800), indicating amplification in the supply chain.

If the Variance of Orders of a Manufacturer Equals 800