The bullwhip effect refers to:

Question

BlackTom AI · Accepted Answer

When tackling the concept of the bullwhip effect, we look at how demand signals get amplified as they move upstream from customers toward suppliers.
Option 1: 'Lower variability upstream'—This contradicts the core idea of the bullwhip effect, which describes how small changes at the consumer level become larger fluctuations as they move up the chain, not a reduction in variability.
Option 2: 'Increased order variability upstream'—This accurately reflects the bullwhip effect. Demand signals become more erratic at each stage moving upstream, causing orders to vary more than final consumer demand due to forecasting, batch ordering, and lead times.
Option 3: 'Reduced inventory'—While inventory practices relate to supply chain performance, the bullwhip effect specifically concerns variability in orders, not a direct statement about inventory levels. Reduced inventory is not the defining feature here.
Option 4: 'Faster fulfillment'—Faster fulfillment describes responsiveness or service level, not the amplification of order variability. It does not capture the phenomenon of upstream fluctuation growth.
In sum, the essence of the bullwhip effect is the amplification of demand variability as it travels upstream through the supply chain, which aligns with option 2.

The bullwhip effect refers to:

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