A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following?

Question

Quizplus · Accepted Answer

The behavior described in the scenario is the result of the bullwhip effect, which is a phenomenon where small fluctuations in demand at the retail level can lead to larger and larger fluctuations in demand at the wholesaler, distributor, and manufacturer levels. In this case, the initial increase in demand for lobster at the restaurant level resulted in an even larger order being placed with the lobsterman by the distributor, which may have been unnecessary and could lead to excess inventory and higher costs throughout the supply chain.

A Restaurant Runs a Special Promotion on Lobster and Plans