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HACTEHA [7]
3 years ago
5

The continuing cycle of erratic demand causing forecasts to include safety stock which in turn magnify supplier forecasts and ca

use production planning problems is known as______________.
Business
1 answer:
balandron [24]3 years ago
6 0

Answer:

The Bullwhip Effect

Explanation:

Bullwhip effect is a phenomenon that occurs in an organisation's channel of distribution due to swings or erratic demands for products by customers. This erratic nature of demands will usually lead to forecasting inefficiencies especially in meeting the demands through the supply chain.

A sudden increase in demand could lead to production planning problems because there might not be enough inventory of materials on ground to meet the demand. Also, a sudden decrease in demand can bring the challenge of excess inventory of materials which may not be needed for production for a while.

One of the measures taken to manage this erratic nature of demands is to ensure that whatever the forecasts for demands is, safety stock must be included to the forecast level of demand so as to ensure that production planning is adequate and the demands are met as well.

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If the rectangular field has notional sides
x
and
y
, then it has area:
A
(
x
)
=
x
y

[
=
6
⋅
10
6
sq ft
]
The length of fencing required, if
x
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L
(
x
)
=
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x
+
2
y
It matters not that the farmer wishes to divide the area into 2 exact smaller areas.
Assuming the cost of the fencing is proportional to the length of fencing required, then:
C
(
x
)
=
α
L
(
x
)
To optimise cost, using the Lagrange Multiplier
λ
, with the area constraint :
∇
C
(
x
)
=
λ
∇
A

∇
L
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x
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∇
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⇒
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y
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x
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x
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3
y
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y
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{
2
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sq ft
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⋅
10
3
ft
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⋅
10
3
ft
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