What conclusions can you draw regarding the impact that economies of scale may have on the bullwhip effect? Select all of the correct statements below.

A. The effect of decreasing variance of orders with the less frequent orders could be reduced via channel coordination by determining lot sizes.

B. The effect of increasing variance of orders with the less frequent orders could be reduced via channel coordination by determining lot sizes.

C. Larger, less frequent orders imply a smaller variance of orders.

D. Larger, less frequent orders imply a larger variance of orders.

Economies of scale refer to the situation where, as the quantity of output increases, the cost per unit decreases. In the context of the bullwhip effect, larger and less frequent orders lead to decreasing variance of orders, as seen in option A. This reduction in variance is crucial in minimizing the bullwhip effect through channel coordination and determining lot sizes.

In contrast, larger and less frequent orders actually imply a larger variance of orders, as stated in option D. When orders are infrequent but substantial in size, the fluctuations in the ordering pattern can magnify down the supply chain, contributing to the bullwhip effect.

Therefore, understanding how economies of scale impact order quantities and variability is essential in mitigating the bullwhip effect within supply chains.

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