The bullwhip effect causes an increase in inventory costs throughout the supply chain due to the distortion of demand information as it travels upstream. This can result in overproduction, stockouts, and other inefficiencies that negatively impact the supply chain.

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The Bullwhip Effect

Question 62

Multiple Choice

The bullwhip effect

A) results in decreasing fluctuations as the demand travels upstream from the customer
B) increases the costs associated with inventory in the supply chain
C) results in fewer orders being placed by customers
D) occurs because of distortions of technology in the supply chain

Correct Answer: