Supply Chain Management Professional (SCMP) · Question
Which of the following describes the 'bullwhip effect' in a supply chain?
The bullwhip effect describes how small changes in customer demand can cause increasingly larger fluctuations in orders placed further up the supply chain. This
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Question: Which of the following describes the 'bullwhip effect' in a supply chain?
Answer options: ✅ Small fluctuations in demand at the retail level leading to larger and larger fluctuations further up the supply chain.
- The rapid adoption of new technologies across all tiers of the supply chain.
- A sudden and unexpected increase in transportation costs due to fuel price volatility.
- The phenomenon where a single supplier dominates a particular commodity market.
Correct answer: Small fluctuations in demand at the retail level leading to larger and larger fluctuations further up the supply chain.
Explanation: The bullwhip effect describes how small changes in customer demand can cause increasingly larger fluctuations in orders placed further up the supply chain. This amplification can lead to inefficiencies, excess inventory, and stockouts.
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