Asked by Megan kibby on Jul 17, 2024
Verified
A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain,thus increasing the bullwhip effect.
Bullwhip Effect
The phenomenon in supply chains where small fluctuations in demand at the retail level cause progressively larger variations in demand at wholesale, distributor, and manufacturer levels.
Lot Sizes
The number of units of a product that are manufactured or acquired in a single production run or order, affecting both inventory levels and production cost.
Fluctuation
Variations or changes in level, value, or volume, often encountered in markets, demand, or supply conditions.
- Recognize the causes and consequences of the bullwhip effect within a supply chain.
- Understand the impact of lot sizing and inventory decisions on supply chain performance.
Verified Answer
AC
Alexis CorderoJul 22, 2024
Final Answer :
False
Explanation :
A reduction of lot sizes actually helps in reducing the bullwhip effect because it allows for more frequent ordering in smaller quantities, which can lead to a better match between supply and demand, thus reducing fluctuations.
Learning Objectives
- Recognize the causes and consequences of the bullwhip effect within a supply chain.
- Understand the impact of lot sizing and inventory decisions on supply chain performance.