Which of the Following Is True About the Bullwhip Effect

question 6

Multiple Choice

Which of the following is true about the bullwhip effect?

• A)Small changes in demand at the supplier are amplified at each stage of the supply chain.
• B)It is a natural dynamic that occurs because of the multistage nature of the supply chain.
• C)It is strongly associated with erratic consumer demand.
• D)It increases the overall profitability of the supply chain.

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Definitions:

Periodic Inventory System

A method of inventory valuation where inventory counts and cost of goods sold calculations are made periodically at the end of a reporting period, instead of after each sale.

Cost Flow Assumptions

Accounting principles that dictate how the cost of goods sold and ending inventory values are calculated, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

LIFO

"Last In, First Out" - an inventory valuation method where the most recently produced or purchased items are recorded as sold first.

FIFO

"First-In, First-Out," an inventory valuation method where goods first purchased or produced are the first to be sold or used.