ISCM Q&A Case Study 1

1. Illustrate the bullwhip effect! Describe any four factors that have impact on the
bullwhip effect and propose counter measures.

• Name four factors that have impact on the bullwhip effect:

 • Counter measures:

2. What is the purpose of the beer game?

The exercise focus is on the relationships between suppliers, OEMs, distributors and
customers and the effects that can occur in a supply chain.
• To understand the basics of the Supply Chain
• To learn how to manage orders and the changing inventory along with the orders
• To see the difficulties in managing the supply chain with delays and bottlenecks
3. Explain the difference between Forrester and Burbridge effect! Use a diagram.
• Forrester:
Forrester developed a simulation model of a representative production-distribution
system. The methodology is based on control theory and employed continuous
functions to model system performance.
• Burbridge:
In contrast to F. this approach emphasized the “sharp edge” and discontinuous
nature of production

4. Please label the following Input-Output diagram showing Forrester and

Burbridge sources of demand amplification.
5. Define the feedforward logic! How can this forecasting mechanism contribute the
system instability?
Feedforward logic refers to the way in which forecasting algorithms are used to
determine production and target inventories for future periods.
The forecasting methods can however contribute to the instability by over-reacting to
a temporary sales blip and building unnecessary inventory that must be depleted by
cuts in future production.

6. Describe the four material flow principles for bullwhip reduction!

• Control systems principle
Involves selection of decision support systems, including synchronization and
avoidance of the batch-and-queue scenario. Being appropriate to good dynamic
control of the total supply chain
• Time compression principle
Involves re-engineering in order to compress material and information-processing
lead times. Shorter time delays enable faster inventory adjustments and limit the
extent of inventory discrepancies. Shorter wavelength as the feedback loops are
closer.
• Information transparency principle
Involves the widespread provision of high integrity operations information
throughout the supply chain. Due to Web-based supply chain systems information
transparency is very easy for companies. How-ever the stream of information from
the end-customer to the raw material supplier is still a sensitive issue.
• Echelon elimination principle
Involves the elimination of redundant echelons and functional interfaces. This
removes the time delay and information distortion, but may lead to a substantially
different channel of distribution