A large manufacturing company offers a forty percent discount on all its products for a short period of time. As a result, the retailers order and stock more products than needed in order to cash in on the opportunity. This situation refers to the ________.

Question

Quizplus · Accepted Answer

The scenario described in the question refers to the bullwhip effect, which is a phenomenon where fluctuations in demand at the consumer level can result in amplified variations in demand further up the supply chain. In this case, the discount offered by the manufacturer creates a surge in orders from retailers who anticipate higher demand from customers. As a result, the manufacturer may overproduce, leading to excess inventory and increased costs. This effect is called the "bullwhip" because it resembles the way a small wave at the end of a whip can create a larger wave further up the whip.

A Large Manufacturing Company Offers a Forty Percent Discount on All