The bullwhip effect causes
A)maximization of supply chain surplus.
B)improved accuracy of demand information within the supply chain.
C)different stages of the supply chain to have a very different estimate of what demand looks like.
D)less need for aggregate planning.

Question

Quizplus · Accepted Answer

The bullwhip effect is the amplification of demand variability as we move upstream in the supply chain. Hence each stage has a different estimate of demand, causing stockouts or excess inventories, making demand forecasting and supply chain planning very challenging. Therefore, option C is the correct choice. The rest of the choices are incorrect because the bullwhip effect adversely affects the supply chain's surplus and accuracy of demand information, making aggregate planning more demanding.

The Bullwhip Effect Causes