Asked by Jonas Hauser on May 06, 2024
Verified
What is the value of the bullwhip measure for a company with a standard deviation of demand equal to 20, and a variance of orders equal to 450?
A) 0.889
B) 22.5
C) 1.125
D) 0.044
E) 50
Bullwhip Measure
A quantification of the bullwhip effect, which illustrates how variations in demand can be amplified as one moves up the supply chain.
Standard Deviation
A statistical measure of the dispersion or variability in a data set, indicating how much individual data points deviate from the mean or average.
- Calculate and interpret the bullwhip measure to assess supply chain volatility.
Verified Answer
SE
Shaun EdwardsMay 12, 2024
Final Answer :
C
Explanation :
The bullwhip measure is given by the square root of the ratio of the variance of orders to the variance of demand. Thus, the bullwhip measure = sqrt(450/20) = sqrt(22.5) = 1.5. However, the question asks for the value of the bullwhip measure, not the square root of it. So, we need to simply divide the calculated value by the square root of 2 (since the ratio of variances is given, not the ratio of standard deviations): 1.5/sqrt(2) = 1.125. Therefore, the correct answer is C.
Learning Objectives
- Calculate and interpret the bullwhip measure to assess supply chain volatility.