The most common solution to supply chain uncertainties is to build inventories or safety stock as insurance, but that can cause the bullwhip effect in the supply chain.

Question

Quizplus · Accepted Answer

Building inventories or safety stock as insurance can lead to the bullwhip effect in the supply chain, where small fluctuations in demand can result in large variations in orders and inventory levels. This can further disrupt the supply chain and lead to inefficiencies and increased costs. Therefore, it is important to explore other solutions such as improving communication and collaboration among supply chain partners, increasing flexibility and responsiveness, and reducing lead times.

The Most Common Solution to Supply Chain Uncertainties Is to Build