What is the Bullwhip Effect from Wholesaler – Manufacturer segment of the supply chain?

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BlackTom AI · Accepted Answer

The prompt asks: What is the Bullwhip Effect from Wholesaler – Manufacturer segment of the supply chain?

First, recall the concept: the bullwhip effect describes how small fluctuations in customer demand at the end of the supply chain can cause progressively larger fluctuations upstream as orders move from retailers to wholesalers, distributors, manufacturers, and suppliers. In the specific segment from wholesaler to manufacturer, this effect manifests as amplified order variability and longer lead times upstream, meaning manufacturers see more erratic, larger swings in demand than ended up in consumer sales.

Key drivers in this segment include: longer lead times and forecasting delays, order batching by wholesalers seeking to optimize inventory and order cost, price promotions or lot-sizing at the wholesaler level, and distorted demand signals passing from retailer to wholesaler and then to manufacturer. As a consequence, manufacturers may respond with adjusted production schedules, safety stocks, and capacity changes that magnify the initial demand signal.

Given that no answer options are provided in the prompt, we cannot evaluate multiple-choice choices. Instead, consider what a value like a bullwhip magnitude of three might imply: if a unit change in consumer demand translates into a threefold change in orders placed upstream (e.g., at the wholesaler or manufacturer), that reflects a moderate to strong bullwhip effect in this link. Such a magnitude would suggest substantial variability amplification, potentially driven by forecast updating, order batching, and lead-time effects common in the wholesaler–manufacturer relationship.

If you have specific options or a context (e.g., a chart or model output) you want interpreted, share them and I can map the bullwhip characteristics to that data. In the meantime, remember the essence: in the wholesaler–manufacturer segment, the bullwhip effect means upstream demand signals become increasingly volatile relative to the actual end-customer demand, prompting reactive changes in production and inventory management downstream.

MGT175_FA25_A00 Mid-Term Examination

What is the Bullwhip Effect from Wholesaler – Manufacturer segment of the supply chain?

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