APICS Certified Supply Chain Professional (CSCP) — Question 60

In a supply chain with the sequence of factory, distributor, wholesaler, retailer, which entity is most likely to experience the greatest variability in demand resulting from the bullwhip effect?

Answer options

Correct answer: A

Explanation

The factory is most likely to experience the greatest variability in demand due to the bullwhip effect because small changes in consumer demand at the retailer level can lead to larger fluctuations upstream. Distributors, wholesalers, and retailers generally have more immediate access to demand information, allowing them to adjust their orders more responsively, thus reducing the variability they face compared to the factory.