Match the factor contributing to the Bullwhip Effect with the countermeasure to mitigate it:
1: price fluctuations and sales promotions (discounts)
2: order batching
3: shortage gaming
4: demand forecast inaccuracies

Question

BlackTom AI · Accepted Answer

Question restatement: Match the factor contributing to the Bullwhip Effect with the countermeasure to mitigate it.
1) price fluctuations and sales promotions (discounts)
2) order batching
3) shortage gaming
4) demand forecast inaccuracies
Countermeasure options:
- vendor managed inventory
- frequent ordering
- forecast based on sales history
- every day low prices
Now, evaluate each pairing:
- Factor 1: price fluctuations and sales promotions (discounts) makes demand appear more variable than it is, which amplifies the bullwhip effect. A suitable mitigation is to reduce discount-driven spikes and stabilize prices. The countermeasure 'every day low prices' directly addresses price volatility by removing promotional swings; thus, 1 should pair with 'every day low prices'.
- Factor 2: order batching occurs when companies place large, infrequent orders, amplifying variability up the supply chain. A natural remedy is to increase the frequency of orders, smoothing the signal to suppliers. Therefore, 2 should pair with 'frequent ordering'.
- Factor 3: shortage gaming happens when participants order more than needed in anticipation of shortages, to secure priority or rationing. One effective approach is to increase information sharing and alignment between partners (e.g., vendor managed inventory), which reduces incentives to game the system and helps stabilize ordering. Consequently, 3 should pair with 'vendor managed inventory'.
- Factor 4: demand forecast inaccuracies arise from poorly forecasted demand, misreading history, or biased projections. A straightforward corrective measure is to base forecasts on actual sales history and trends to improve accuracy, so 4 should pair with 'forecast based on sales history'.
Summary of pairings:
1 → every day low prices
2 → frequent ordering
3 → vendor managed inventory
4 → forecast based on sales history
Notes on why the remaining options are not paired with each factor:
- 'vendor managed inventory' does not directly address price volatility or shortages gaming in a way that simpler, explicit price stabilization would; its primary benefit is improved information flow and co-managed inventory levels, which aligns best with shortage gaming among the given choices.
- 'frequent ordering' clearly targets the issue of batching but would not mitigate price promotions; it’s not the best fit for price fluctuations or forecast inaccuracies.
- 'forecast based on sales history' directly improves forecasts but does not inherently solve the problems created by promotions, batching, or gaming unless paired with information sharing; among the provided pairings, it is the most appropriate for demand forecast inaccuracies.
- 'every day low prices' directly neutralizes promotional price swings but does not inherently address batching, gaming behavior, or forecast methodology by itself; that makes it unsuitable for factors other than price fluctuations.
End result: the above four pairings correctly map each factor to the most fitting countermeasure based on common supply chain practices.

OMIS 2010 R & S Reinforcement 1 Quiz

Match the factor contributing to the Bullwhip Effect with the countermeasure to mitigate it: 1: price fluctuations and sales promotions (discounts) 2: order batching 3: shortage gaming 4: demand forecast inaccuracies

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