Question

The phenomenon that magnifies the variability in order quantities for goods as orders move through the supply chain from the customer to the producer is called the bullwhip effect.
A. True
B. False

Answer 1

Answer:

The answer is letter A, True.

Explanation:

In order to understand the answer better, let's get to know what a bullwhip effect is in a supply chain.

Supply Chain- this is defined as a network of all the individuals, organizations,resources, technology and activities involved in the creation and sale of a product. This starts from the delivery of the source materials from the supplier to the manufacturer up to the delivery to the end user.

Bullwhip effect- this is considered to be a phenomenon of variability magnification. The view moves from the customer to the producer of the supply chain. Thus, the answer is letter A.

Additional Information

The bullwhip effect occurs when the changes in consumer demands cause the companies to order more goods to meet the new demand. This affects the expectations around it, causing a domino effect along the supply chain.

This effect can be prevented by having a clear communication between suppliers and customers. This will allow suppliers to prevent the occurrence of increase cost that will affect the overall supply chain.