If the Variance of Orders of a Manufacturer Equals 800

question 181

Multiple Choice

If the variance of orders of a manufacturer equals 800, and the variance of orders of its supplier equals 850, what is happening at this part of the supply chain?

• A) The bullwhip effect is present.
• B) The supplier is providing a dampening (anti-bullwhip) effect.
• C) The bullwhip measure for the supplier equals 1.067
• D) Neither amplification nor smoothing is present.
• E) Both amplification and smoothing are present.

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Definitions:

Self-Interest

The pursuit of personal gain or advantage, which is a fundamental economic assumption about human behavior.

Welfare

Welfare denotes governmental support aimed at ensuring the basic physical and material well-being of people, particularly those in need.

Complete Knowledge

Refers to a hypothetical situation where all participants in a market have full and perfect information about products, prices, and other market conditions.

Marginal

Relating to the change or difference resulting from a slight incremental increase or decrease in a variable's level.