Question

Which of the following is true about the bullwhip effect?

a. variability in demand increases from the factory stage downstream to the customer stage.
b. this cycle is prevalent in just about every industry.
c. lead times between the stages of the supply chain tend to be very short.
d. information lags stemming from large lot sizes with infrequent orders may be a cause.

Answer 1

The bullwhip effect refers to the increasing variability in demand as we move downstream in a supply chain. It is prevalent in just about every industry and is caused by information lags stemming from large lot sizes with infrequent orders.

Step-by-step explanation:

The bullwhip effect is a concept that refers to the increasing variability in demand as we move downstream from the factory stage to the customer stage in a supply chain. This means that the fluctuations in demand become more pronounced at each stage of the supply chain. Information lags stemming from large lot sizes with infrequent orders contribute to this effect because they make it difficult to accurately predict and respond to changes in demand.

The bullwhip effect is prevalent in just about every industry, so option b is true. In addition, lead times between the stages of the supply chain tend to be relatively long, not short, so option c is false. Therefore, the correct answer is option d: information lags stemming from large lot sizes with infrequent orders may be a cause of the bullwhip effect.