Asked by Aaron Morris on Jun 18, 2024
Verified
The bullwhip effect reduces the profitability of a supply chain by making it simpler to provide a given level of product availability.
Bullwhip Effect
A phenomenon in supply chains where small changes in consumer demand cause larger and more amplified fluctuations in orders and inventory levels up the supply chain.
Profitability
A financial metric indicating the degree to which a company or project generates income or profit compared to its costs and investments.
Product Availability
The degree to which products are in stock and ready to be sold or delivered to customers, impacting customer satisfaction and sales.
- Discern the triggers and effects of the bullwhip phenomenon in supply chain operations.
Verified Answer
EG
elizabeth gutierrezJun 21, 2024
Final Answer :
False
Explanation :
The bullwhip effect increases the total cost of a supply chain and reduces the efficiency and profitability of the system. It causes inventory holding costs to go up due to increased safety stocks, as well as reduced responsiveness to customer demand. Thus, providing a given level of product availability becomes more difficult and expensive.
Learning Objectives
- Discern the triggers and effects of the bullwhip phenomenon in supply chain operations.