What impact does the bullwhip effect have on line control?

What impact does the bullwhip effect have on line control?

• A. It stabilizes inventory levels across the supply chain
• B. It causes fluctuations in inventory levels
• C. It simplifies supply chain management
• D. It increases overall efficiency

Answer: (B)

The bullwhip effect significantly impacts line control by causing fluctuations in inventory levels throughout the supply chain. This phenomenon occurs when small changes in consumer demand at the retail level lead to larger and larger changes in demand further up the supply chain. As each level of the supply chain reacts to perceived changes in demand, it may overreact, resulting in excessive inventory accumulation or shortages. These fluctuations create inefficiencies, complicate demand planning, and disrupt the overall flow of products through the supply chain. The result is often a mismatch between supply and demand, making it challenging for companies to maintain stable inventory levels, which is crucial for effective line control. In contrast to stabilizing inventory or enhancing efficiency, the bullwhip effect tends to create volatility, necessitating better demand management and coordination among supply chain participants to mitigate its impact.

The bullwhip effect significantly impacts line control by causing fluctuations in inventory levels throughout the supply chain. This phenomenon occurs when small changes in consumer demand at the retail level lead to larger and larger changes in demand further up the supply chain. As each level of the supply chain reacts to perceived changes in demand, it may overreact, resulting in excessive inventory accumulation or shortages.

These fluctuations create inefficiencies, complicate demand planning, and disrupt the overall flow of products through the supply chain. The result is often a mismatch between supply and demand, making it challenging for companies to maintain stable inventory levels, which is crucial for effective line control. In contrast to stabilizing inventory or enhancing efficiency, the bullwhip effect tends to create volatility, necessitating better demand management and coordination among supply chain participants to mitigate its impact.