Asked by Paris Smith on Apr 29, 2024
Verified
Identify the four primary causes of the bullwhip effect and the remedy for each.
Bullwhip Effect
A situation in supply chain management where slight shifts in demand from consumers cause increasingly amplified shifts in demand at the levels of manufacturers, distributors, and wholesalers.
Primary Causes
Fundamental reasons or root causes that directly lead to an event, situation, or outcome, distinct from secondary or tertiary factors.
Remedy
Refers to a treatment, solution, or means of correcting or improving a problem, situation, or condition.
- Identify the primary causes of the bullwhip effect and their remedies.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
(1) Cause: Demand forecast errors (cumulative uncertainty in the supply chain); Remedy: Share demand information throughout the supply chain.
(2) Cause: Order batching (large, infrequent orders leading suppliers to order even larger amounts); Remedy: Channel coordination-determine lot sizes as though the full supply chain was one company.
(3) Cause: Price fluctuations (buying in advance of demand to take advantage of low prices, discounts, or sales); Remedy: Price stabilization (everyday low prices).
(4) Cause: Shortage gaming (hoarding supplies for fear of a supply shortage); Remedy: Allocate orders based on past demand.
(2) Cause: Order batching (large, infrequent orders leading suppliers to order even larger amounts); Remedy: Channel coordination-determine lot sizes as though the full supply chain was one company.
(3) Cause: Price fluctuations (buying in advance of demand to take advantage of low prices, discounts, or sales); Remedy: Price stabilization (everyday low prices).
(4) Cause: Shortage gaming (hoarding supplies for fear of a supply shortage); Remedy: Allocate orders based on past demand.
Learning Objectives
- Identify the primary causes of the bullwhip effect and their remedies.