What is the potential negative consequence they should be cautious about?

A large organization wants to reduce its logistics costs and increase productivity by implementing economies of scale and batching in its operations.

What is the potential negative consequence they should be cautious about?
A . Decreased cost efficiency
B . Bullwhip effect
C . Increased information flow
D . Reduced automation

View Answer

Answer: B

Explanation:

The bullwhip effect is a potential risk when implementing economies of scale and batching. It occurs when demand variability is amplified across the supply chain, leading to inefficiencies and information distortions. [P-18]