Give the definition of Bullwhip effect and discuss the impac

Give the definition of “Bullwhip effect” and discuss the impact of Bullwhip effect on the financial performance of an organization. Please have a discussion of at least 100 words.

List at least four reasons for companies to use a single supplier. Is this the most efficient way to purchase materials in general and why?

write in your own words, not copying and pasting from a diiferent website

Solution

Bullwhip effect can be defined as \"the changes or variation in the inventory levels of a product based on huge differentiation in customers\' demand. means a firm has to maintain high inventories at huge demand times and less inventory at less demand times. but it is very difficult to estimate the unexpected demand in the market. if we stored huge inventory, if there is no proper demand in market, majority of our funds will be strucked and locked. if we do not maintain proper inventory, we may not deliver a product to the customer. and he will choose competitiors product.

the main problem on financial performance is funds will be locked in inventory and the firm may face working capital problems. those strucked funds can be utilized for any purposeful need.

the quality of the end product is mainly and highl depends on the quality of the raw material. so a producer who wants to produce qualitative product he concerns about the raw material and its quality. finding the supplier who is ready to providing the material at given conditions and quality aspects is not at all a simple task. once they find a correct supplier they do not go to other supplier. even there are some little or common problems between these twol parties, they can solve them and continue their trade.

and one more important aspect is, if the supplier discloses the quality aspects of the raw material to the competitiors, it becomes a problem to the manufacturer. so, usually they sticks for only one supplier. if they import raw material from more than one supplier, it shows impact on the quality of the end product. because each supplier may provide different kinds or raw materail and it effects the quality of the end product.