Operational improvements that reduce lot sizes can dampen the bullwhip effect by
A)decreasing the uncertainty of demand during the lead time.
B)decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.
C)discouraging retailers from artificially inflating their orders in the case of a shortage.
D)allocating the available supply based on past retailer sales.

Question

Quizplus · Accepted Answer

Lot sizes refer to the amount of products produced or ordered at once. Smaller lot sizes mean less inventory is held, which in turn reduces the likelihood of demand fluctuations compounding throughout the supply chain. This dampens the bullwhip effect and results in a more stable supply chain. Smaller lot sizes decrease the amount of fluctuation that can accumulate between any pair of stages of a supply chain, making option B the correct choice. The other choices are not directly related to the impact of lot size on the bullwhip effect.

Operational Improvements That Reduce Lot Sizes Can Dampen the Bullwhip