The "bullwhip" effect
A) occurs as orders are relayed from retailers to wholesalers
B) results in increasing fluctuations at each step of the sequence
C) increases the costs associated with inventory in the supply chain
D) occurs because of distortions in information in the supply chain
E) all of the above

Question

Quizplus · Accepted Answer

The "bullwhip" effect is a phenomenon where small changes in consumer demand result in increasingly larger fluctuations in demand as the orders are relayed up the supply chain. This occurs due to distortions and delays in information that can cause each stage of the chain to over- or under-estimate demand, leading to higher inventory carrying costs for each stage. Therefore, all of the options (A, B, C, and D) are correct.

The "Bullwhip" Effect