The bullwhip effect can
A)increase inventories.
B)increase demand.
C)increase customer service levels.
D)increase capacity.

Question

Quizplus · Accepted Answer

The bullwhip effect is a phenomenon where small fluctuations in demand at the retail level are amplified as they move up the supply chain. This means that as demand increases slightly at the retail level, it can be interpreted by distributors and manufacturers as a sign of much larger demand, leading them to increase their own inventory levels to meet this perceived demand. This results in increased inventory levels overall, which can be costly for businesses. Therefore, the best choice is A, or increasing inventories.

The Bullwhip Effect Can