Suppose that in month 1,both the retailer and the wholesaler in a supply chain ordered 20,000 units.Then in month 2,the retailer decreases its order size by 1000 units.If the wholesaler then decreases its order size in month 2 by 700 units,which of the following is TRUE?

Question

Quizplus · Accepted Answer

By decreasing its order size in response to the retailer's decrease, the wholesaler is providing a dampening (anti-bullwhip) effect. This is because the wholesaler's ordering behavior is more stable than that of the retailer, which reduces the variability in the upstream supply chain. Option A is incorrect because the wholesaler is not contributing to the bullwhip effect. Option C is incorrect because there is no need to calculate the bullwhip effect for the wholesaler since it is not contributing to it. Option D is incorrect because there is some degree of smoothing happening as a result of the wholesaler's behavior. Option E is incorrect because the wholesaler is not providing amplification, only smoothing.

Suppose That in Month 1,both the Retailer and the Wholesaler