A Restaurant Runs a Special Promotion on Lobster and Plans

question 106

Multiple Choice

A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following?

• A) double marginalization
• B) the bullwhip effect
• C) CPFR
• D) postponement
• E) vendor-managed inventory

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Definitions:

Defect Rate

A measure of the frequency at which errors or flaws occur in a manufacturing process or a product.

Quality Performance

The degree to which a product or service meets customer expectations and industry standards.

Internal Failure Costs

Costs incurred to rectify defects found before the delivery of a product to the customer, part of quality control expenses.

Defective Products

Items that fail to meet quality standards or specifications and are therefore unsuitable for sale or use.