Operational Improvements That Reduce Lot Sizes Can Dampen the Bullwhip

question 76

Multiple Choice

Operational improvements that reduce lot sizes can dampen the bullwhip effect by

• A)decreasing the uncertainty of demand during the lead time.
• B)decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.
• C)discouraging retailers from artificially inflating their orders in the case of a shortage.
• D)allocating the available supply based on past retailer sales.

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Definitions:

FIFO Method

An inventory valuation method (First-In, First-Out) where the oldest items in inventory are sold or used first.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, expressed in terms of full units of output.

Direct Materials

Materials that can be directly linked to the production process of a product and are essential components of the final product.

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold, weighing the average by the quantities purchased at different prices.