Incentives that focus only on the local impact of an action result in decisions that
A)do not maximize total supply chain profits.
B)maximize total supply chain profits.
C)minimize total supply chain profits.
D)minimize total supply chain cost.

Question

Quizplus · Accepted Answer

Incentives that only consider the local impact of an action may lead to decisions that benefit one part of the supply chain but do not necessarily maximize total supply chain profits. This can be because decisions that are optimal for one part of the supply chain may not be optimal for the entire chain, leading to suboptimal outcomes. Thus, incentives that take into account the entire supply chain are needed to ensure decisions that maximize total supply chain profits.

Incentives That Focus Only on the Local Impact of an Action