The Textbook States That "The Bullwhip Effect Can Be a Pervasive

question 43

Essay

The textbook states that "the bullwhip effect can be a pervasive and expensive problem along the supply chain." Answer the following questions in relation to the bullwhip effect:
1.Briefly describe the bullwhip effect.
2.List 2 key activities that cause the bullwhip effect.How do they exacerbate the problems associated with the bullwhip effect?
3.How can process integration help prevent/minimize the bullwhip effect?
4.List 2 other key activities that can act as deterrents against the bullwhip effect.How do they minimize and/or eliminate the problems associated with the bullwhip effect?
1.Vendor Managed Inventory Systems - VMI systems empower suppliers to manage inventories for their customers based on information supplied directly to the supplier via the customer's system.This not only allows for increased visibility,it also allows for suppliers to act at a time closer to the actual moment of need.
2.Increasing Information Visibility - Developing information systems which allow organizations and their supply chain members to more accurately assess the needs of the system/customers will allow for more effective planning and in turn provide a more efficient use of resources.
3.Decreasing Order Sizes - smaller order sizes help supply chain members more accurately track changes in demand.Such orders will be more frequent,and allows forecasts to be more accurate.
4.Maintaining a policy of Everyday Low Prices - this helps to minimize or eliminate price fluctuations which may cause irregular buying patterns,or create an enlarged sense of demand variability.
5.Reducing the length of the supply chain can reduce the bullwhip effect by reducing the number of occasions when forecasts are calculated.
6.Reducing lead times from order to delivery will allow organizations to order in a just-in-time manner,and allows for more small order quantities.
7.Attempting to limit shortage gaming by allocating product for sale to buyers based on demand histories.

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