The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in
A) forecasts based on actual consumer demand patterns.
B) a reduction in demand as we move up the supply chain from the retailer to the manufacturer.
C) a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.
D) an increase in forecast accuracy.
E) none of the above

Question

Quizplus · Accepted Answer

Each stage in a supply chain forecasts demand based on the orders they receive from the downstream stage, which can magnify fluctuations in demand as we move up the supply chain. For example, if a retailer receives a sudden surge in demand and places a large order with their supplier, this may be interpreted by the supplier as an increase in long-term demand rather than a short-term surge. This can lead to overproduction and excess inventory if demand does not continue at that level.

The Fact That Each Stage in a Supply Chain Forecasts