A reduction in replenishment lead time helps dampen the bullwhip effect by reducing the underlying uncertainty of demand.

Question

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Replenishment lead time refers to the time required for an order to be placed and the goods to be received. When this lead time is reduced, it results in less uncertainty and better coordination between supply chain partners. This, in turn, reduces the bullwhip effect by preventing the over-amplification of demand fluctuations upstream.

A Reduction in Replenishment Lead Time Helps Dampen the Bullwhip