SCM 300 MODULE 6 EXAM 2 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

SCM 300 MODULE 6 EXAM 2 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. Bullwhip effect
Answer:
High and low inventories despite fairly constant demand levels

Question:
2. 4 causes of bullwhip effect
Answer:
1. Order Batching - Trying to place large orders
2. Price Fluctuations - Promotions, Quantity discounts, Special pricing/payment options...Can cause
batching
3. Rationing - Demand higher than supply. Promotes rationing on part of "distributor". "Retailers" may get
less than ordered.
4. Shortage Gaming - Retailers inflate order sizes to counteract rationing

Question:
3. Forward Buying
Answer:
This occurs when customers buy more product than is actually needed. Often this is the result of suppliers
offering sales

Question:
4. Lead time gaming example from lecture
Answer:
Medical team starts gaming when shipments come slow - they will ask for medicine to arrive weeks before
it needs to

Question:
5. 5 methods for controlling the bullwhip effect
Answer:
1. Everyday low pricing
2. VMI
3. Information sharing
4. Develop strong buyer-supplier relationships
5. Practicing lean manufacturing

Question:
6. EDLP
Answer:
Every Day Low Price - When suppliers resist the urge to have sales promotions and instead offer their
lowest (and most competitive) prices each day