The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in
A)forecasts based on actual consumer demand patterns.
B)a reduction in demand as we move up the supply chain from the retailer to the manufacturer.
C)a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.
D)an increase in forecast accuracy.

Question

Quizplus · Accepted Answer

The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage causes a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer. This is known as the bullwhip effect, where small changes in consumer demand can result in significant changes in demand orders up the supply chain.

The Fact That Each Stage in a Supply Chain Forecasts