Which of the following statements is true of the bullwhip effect?
A)It forces suppliers and manufacturers to carry smaller inventories than necessary.
B)It is a natural dynamic that occurs because of the multistage nature of the supply chain.
C)It is strongly associated with erratic consumer demand.
D)It increases the overall profitability of the supply chain.

Question

Quizplus · Accepted Answer

The bullwhip effect is a natural dynamic that occurs because of the multistage nature of the supply chain. As information flows from the retailer to the manufacturer, the demand signal becomes amplified, resulting in increased variability in demand and inventory levels.

Answer: C 
 The bullwhip effect is strongly associated with erratic consumer demand. As consumer demand fluctuates, there is a tendency for ordering patterns to become more volatile, which amplifies the demand signal as it moves upstream through the supply chain.

Answer: A and C 
 The bullwhip effect forces suppliers and manufacturers to carry smaller inventories than necessary because they are uncertain about future demand patterns. This uncertainty is a result of the increased variability in demand that is associated with the bullwhip effect.

Which of the Following Statements Is True of the Bullwhip