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Final

BUS 336 Study Guide - Final Guide: Electronic Data Interchange


Department
Business Administration
Course Code
BUS 336
Professor
Michael Johnson
Study Guide
Final

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Bullwhip Effect 12/7/2011 9:07:00 PM
Bullwhip Effect: A trend of larger and larger swings in inventory in
response to changes in demand, as one looks at firms further back in the
supply chain for a product.
Causes: Inefficiencies in the supply chain and incurs extra costs to those
in the chain
Also known as: Whiplash or Whipsaw Effect
Causes
Demand Forecast Updating
When one updates their forecast using smoothing techniques, they
include their safety stock as well, but other managers do not know
of this in the order
Order Batching
Peroidic Ordering: Ordering all at one time, ex: Monthly ordering
o Uses Material Requirement Planning (MRP) and Distribution
Requirement Planning (DRP)
o Called MRP and DRP jitters
Push Ordering: Sudden surges in the ordering period
Price Fluctuation
Promotions can cause consumers to stock up on items that do not
reflect their immediate needs
“Dumbest Marketing Ploy” as it harms the company later on
Rationing and Shortage Gaming
If company only has 50% stock of the demands, they would fill
50% of the customer’s orders As a result of such practice,
customers would artificially order more to anticipate this rationing,
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