Asked by McGwire Midkiff on Jun 25, 2024
Verified
A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributer, the distributer assumes the large size is a trend, not a one-time event. The distributer therefore places an even larger order with the lobsterman. This is the result of
A) double marginalization.
B) the bullwhip effect.
C) CPFR.
D) a pass-through facility.
E) vendor-managed inventory.
Bullwhip Effect
A phenomenon in supply chains where variations in demand cause progressively larger variations in supply, leading to inefficiency and excess inventory.
Distributer
A company or individual responsible for the movement of goods from a manufacturer to the point of sale, usually adding value through storage, transportation, and marketing.
Large Order
A request for a significantly large quantity of goods or services.
- Comprehend the principle of the bullwhip effect and its repercussions on supply chains.
Verified Answer
BN
Brittany NicoleJun 26, 2024
Final Answer :
B
Explanation :
The situation described involves the bullwhip effect, which is when small changes in consumer demand lead to increasingly large changes in upstream demand as information is passed through the supply chain. In this case, the promotion caused the restaurant to order twice as many lobsters as usual, which caused the distributer to order even more lobsters from the lobsterman due to the assumption that this was a trend rather than a one-time event. This is an example of the bullwhip effect in action.
Learning Objectives
- Comprehend the principle of the bullwhip effect and its repercussions on supply chains.