Describe how the U.S. Cash for Clunkers program unintentionally contributed to the bullwhip effect in the automobile industry

What will be an ideal response?

In an effort to stimulate the economy and improve fuel efficiency, the United States offered attractive rebates for trading old cars in exchange for new, more fuel-efficient vehicles. This eight-week program proved very popular with consumers. Fearing a shortage and assuming that they would not receive 100% of their orders, some dealers inflated orders for new cars to try to receive a larger pool of allocated vehicles. In one month, the program increased demand by 50% for automakers, many of whom had already cut capacity significantly. Almost overnight, manufacturers and parts suppliers had to transform from a shift reduction mode to an overtime mode.