Supply Chain Management Professional (SCMP) · Question
What is the primary risk associated with a 'bullwhip effect' in the supply chain?
The bullwhip effect describes how small fluctuations in end-customer demand can lead to increasingly larger fluctuations further up the supply chain. This cause
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Question: What is the primary risk associated with a 'bullwhip effect' in the supply chain?
Answer options:
- Increased transportation costs due to fuel price volatility. ✅ Amplified demand variability upstream, leading to inefficiencies.
- Product obsolescence due to rapid technological changes.
- Supplier bankruptcy due to over-reliance on a single customer.
Correct answer: Amplified demand variability upstream, leading to inefficiencies.
Explanation: The bullwhip effect describes how small fluctuations in end-customer demand can lead to increasingly larger fluctuations further up the supply chain. This causes excess inventory or stockouts.
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