Describe how the U.S. Cash for Clunkers program unintentionally contributed to the bullwhip effect in the automobile industry

What will be an ideal response?


In an effort to stimulate the economy and improve fuel efficiency, the United States offered attractive rebates for trading old cars in exchange for new, more fuel-efficient vehicles. This eight-week program proved very popular with consumers. Fearing a shortage and assuming that they would not receive 100% of their orders, some dealers inflated orders for new cars to try to receive a larger pool of allocated vehicles. In one month, the program increased demand by 50% for automakers, many of whom had already cut capacity significantly. Almost overnight, manufacturers and parts suppliers had to transform from a shift reduction mode to an overtime mode.

Business

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When a price is inelastic, a price increase improves all aspects of performance

Indicate whether the statement is true or false

Business

All of the following are advantages of the test data technique except

a. auditors need minimal computer expertise to use this method b. this method causes minimal disruption to the firm's operations c. the test data is easily compiled d. the auditor obtains explicit evidence concerning application functions

Business

Noncash investing and financing transactions, such as the exchange of a long-term asset for a long-term liability, represent significant investing and financing activities and are reflected in a separate schedule as part of the statement of cash flows

Indicate whether the statement is true or false

Business

Which project has the highest profitability index?

The following information is provided by Graham Company:



A) Project A
B) Project B
C) Project C
D) Project D

Business