Draw a graph illustrating the bullwhip effect and discuss its impact on the measures of supply chain performance

What will be an ideal response?

Sketches will vary slightly, but should illustrate increased variability upstream in the supply chain. The inventory measures of supply chain performance, average aggregate inventory value, weeks of supply, and inventory turnover, will fluctuate as the whip is cracked. At times, the measures may be deceptively strong, but at other times in the bullwhip cycle the measures will be abysmal. Process measures relating to customer relationship, order fulfillment, and supplier relationship will also fluctuate although measures like "customer satisfaction" may deteriorate as customers tire of the rollercoaster performance of the supply chain. Financial measures like ROA, CGS, total revenue, cash flow, and working capital will also behave cyclically but will be weaker than a supply chain operating sans bullwhip effect. At times, members of the supply chain will be caught holding the bag on inventory and forced to dump it at bargain prices and at other times supply chain members will be unable to acquire the inventory they need or will have to pay exorbitant costs to acquire it.