OPMA 317 CHAPTER 6 EXAM QUESTIONS WELL ANSWERED LATEST UPDATE 2026
What is the bullwhip effect? - Answers Demand information gets distorted and amplified as it travels
upstream (retailer → factory).
What are the two root causes of the bullwhip effect? - Answers 1) Lack of
communication/cooperation and 2) Long lead times.
In the Beer Game, what was the actual end-customer demand? - Answers Steady demand: 4
units/week for 4 weeks, then 8 units/week after.
Which way do orders flow, and which way do products flow? - Answers Orders flow upstream
(retailer → factory). Products flow downstream (factory → retailer).
Why does a long lead time make the bullwhip worse? - Answers Delays cause growing backlogs,
leading to panic over-ordering and eventual excess inventory.
Name the three patterns visible in the order graphs. - Answers Fluctuation, amplification (swings
grow upstream), and time lag.
What is the bullwhip measure rule? - Answers If the measure is greater than 1, variance amplification
(bullwhip effect) is present.
What is VMI? - Answers Vendor-Managed Inventory — the vendor manages and replenishes the
customer's inventory.
What is CPFR? - Answers Collaborative Planning, Forecasting & Replenishment — partners share
forecasts, schedules, and decisions.
List ways to reduce the bullwhip effect. - Answers Share real demand, use VMI/CPFR, shorten lead
times, and smooth demand.
What is demand smoothing, and the classic example? - Answers Avoiding artificial demand waves;
modeled by P&G's "everyday low prices" diaper strategy.
Define on-shoring / re-shoring / next-shoring. - Answers Bringing production closer to demand to
shorten and stabilize lead times.
What is the aspirin rule? - Answers Don't over-react (reorder) before your previous action (shipment)
has had time to work.
If you can't change the supply chain structure, what should you do? - Answers Adapt to it: recognize
delays, use systems thinking, and share information.
Why are Beer Game results so consistent across cultures? - Answers The problem is structural
(communication gaps + lead times), not player skill.
What business costs result from the bullwhip effect? - Answers Stockouts, excess inventory,
overtime, labor churn, and expediting/rush freight.
Roughly what total cost do teams rack up in the Beer Game, and what does it prove? - Answers
Around $2,000 in Sterman's original board game, and much higher in other datasets (up to ~$6,500).
Costs are remarkably consistent across cultures and experience — proof that the structure, not the
players, drives the outcome.
What were the only things pre-set in the Beer Game? - Answers The game rules and the end-
customer demand. Every ordering decision was up to the players — yet chaos still emerged. That's the
puzzle the debrief opens with.
Roughly how long was the lead time, and what was it made of? - Answers About 3 weeks: ~1 week to
transmit the order, ~1 week to fill/package it, ~1 week to ship it — and longer still if your supplier is
out of stock.
Canadian Tire CPFR — what changed, and what was the result? - Answers They gave major suppliers
a rolling 26-week planned order stream (regenerated weekly). Supplier lead times dropped from a
~46-day average to about 15 days.
What does the IKEA / Swedwood US plant illustrate? - Answers On-shoring. Building in the US (2008)
was called "insane," but transport is the most expensive part of the furniture business, so producing
near demand cut sourcing costs, lead times, and currency exposure.
What does Ford's Chicago "supplier campus" illustrate? - Answers Shortening transport lead time by
putting suppliers next to demand. Some components go into a vehicle ~90 minutes after being made,
letting Ford run JIT with under 2 days of inventory.
If off-shoring causes longer, more variable lead times, why do companies still do it? - Answers Lower
labour / production costs. That cost saving is the trade-off against responsiveness — which is exactly
what on-shoring and next-shoring push back against.
What is the bullwhip effect? - Answers Demand information gets distorted and amplified as it travels
upstream (retailer → factory).
What are the two root causes of the bullwhip effect? - Answers 1) Lack of
communication/cooperation and 2) Long lead times.
In the Beer Game, what was the actual end-customer demand? - Answers Steady demand: 4
units/week for 4 weeks, then 8 units/week after.
Which way do orders flow, and which way do products flow? - Answers Orders flow upstream
(retailer → factory). Products flow downstream (factory → retailer).
Why does a long lead time make the bullwhip worse? - Answers Delays cause growing backlogs,
leading to panic over-ordering and eventual excess inventory.
Name the three patterns visible in the order graphs. - Answers Fluctuation, amplification (swings
grow upstream), and time lag.
What is the bullwhip measure rule? - Answers If the measure is greater than 1, variance amplification
(bullwhip effect) is present.
What is VMI? - Answers Vendor-Managed Inventory — the vendor manages and replenishes the
customer's inventory.
What is CPFR? - Answers Collaborative Planning, Forecasting & Replenishment — partners share
forecasts, schedules, and decisions.
List ways to reduce the bullwhip effect. - Answers Share real demand, use VMI/CPFR, shorten lead
times, and smooth demand.
What is demand smoothing, and the classic example? - Answers Avoiding artificial demand waves;
modeled by P&G's "everyday low prices" diaper strategy.
Define on-shoring / re-shoring / next-shoring. - Answers Bringing production closer to demand to
shorten and stabilize lead times.
What is the aspirin rule? - Answers Don't over-react (reorder) before your previous action (shipment)
has had time to work.
If you can't change the supply chain structure, what should you do? - Answers Adapt to it: recognize
delays, use systems thinking, and share information.
Why are Beer Game results so consistent across cultures? - Answers The problem is structural
(communication gaps + lead times), not player skill.
What business costs result from the bullwhip effect? - Answers Stockouts, excess inventory,
overtime, labor churn, and expediting/rush freight.
Roughly what total cost do teams rack up in the Beer Game, and what does it prove? - Answers
Around $2,000 in Sterman's original board game, and much higher in other datasets (up to ~$6,500).
Costs are remarkably consistent across cultures and experience — proof that the structure, not the
players, drives the outcome.
What were the only things pre-set in the Beer Game? - Answers The game rules and the end-
customer demand. Every ordering decision was up to the players — yet chaos still emerged. That's the
puzzle the debrief opens with.
Roughly how long was the lead time, and what was it made of? - Answers About 3 weeks: ~1 week to
transmit the order, ~1 week to fill/package it, ~1 week to ship it — and longer still if your supplier is
out of stock.
Canadian Tire CPFR — what changed, and what was the result? - Answers They gave major suppliers
a rolling 26-week planned order stream (regenerated weekly). Supplier lead times dropped from a
~46-day average to about 15 days.
What does the IKEA / Swedwood US plant illustrate? - Answers On-shoring. Building in the US (2008)
was called "insane," but transport is the most expensive part of the furniture business, so producing
near demand cut sourcing costs, lead times, and currency exposure.
What does Ford's Chicago "supplier campus" illustrate? - Answers Shortening transport lead time by
putting suppliers next to demand. Some components go into a vehicle ~90 minutes after being made,
letting Ford run JIT with under 2 days of inventory.
If off-shoring causes longer, more variable lead times, why do companies still do it? - Answers Lower
labour / production costs. That cost saving is the trade-off against responsiveness — which is exactly
what on-shoring and next-shoring push back against.
