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Supply Chain Management and the Bullwhip Effect

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Your boss was recently reading about supply chain management. During her reading, she came across the term bullwhip effect. She also asked you to put together a presentation about the bullwhip effect so that she could explain it to senior management.

Include the following in your presentation:
How does the bullwhip effect happen?
Why is the effect bad?
What can be done to reduce or eliminate the effect?

need to explain in PowerPoint of 5 to 10 slides with notes

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Solution Summary

Discusses bullwhip effect.

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Operations management - Supply chain management & the bullwhip effect

See the attached file also.

Question 1:

IF: THEN (all else equal, it is likely that):

a) We aim to increase "inventory velocity" We must produce and push work-in-process faster to next operation/ wait and produce only what is pulled by next operation. EXPLAIN WHY

b) We install an expensive machine that requires The intensity of the "bull whip" in the supply chain
very large production batches but it is fast will increase / decease / not be affected. EXPLAIN WHY

c) We consolidate inventories from two (nearby) "Service level" will increase / decrease/ not be affected warehouses into one warehouse (keeping the same EXPLAIN WHY
amount of inventory)

Question 2:

A plant makes four different models of DeskJet printers. Up to now, it has been producing each model only once every week (for example, Model A on Mondays, Model B on Tuesdays and part of Wednesdays, Model C on Wednesdays and Thursdays, and Model D on Fridays). There is a proposal to move from weekly to daily schedule and produce some of each model every day. Total weekly production output would be the same. Changeover times and costs (from one model to another) are insignificant.

Would this change reduce or increase:
a) The level of inventory of printers in the supply chain after the plant? Why?
b) The level of "work in process" inventory in the plant (i.e., number of printers being assembled)? Why?
c) The intensity of the "bull whip" in the entire supply chain? Why?

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