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    manishg74
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    The document describes a simulation game called "The Beer Game" that models a basic 4-stage supply chain consisting of a factory, distributor, wholesaler, and retailer. Players in each role must manage inventory levels and fulfill orders from the next stage while facing production and transportation delays. The game aims to illustrate how demand variability increases as it moves up the supply chain, known as the bullwhip effect. By playing both local and global versions, players can see how sub-optimal decisions at each stage compound across the entire chain.

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    BEER_GAME

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    The document describes a simulation game called "The Beer Game" that models a basic 4-stage supply chain consisting of a factory, distributor, wholesaler, and retailer. Players in each role must manage inventory levels and fulfill orders from the next stage while facing production and transportation delays. The game aims to illustrate how demand variability increases as it moves up the supply chain, known as the bullwhip effect. By playing both local and global versions, players can see how sub-optimal decisions at each stage compound across the entire chain.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    143 views25 pages

    Beer Game

    Uploaded by

    manishg74
    The document describes a simulation game called "The Beer Game" that models a basic 4-stage supply chain consisting of a factory, distributor, wholesaler, and retailer. Players in each role must manage inventory levels and fulfill orders from the next stage while facing production and transportation delays. The game aims to illustrate how demand variability increases as it moves up the supply chain, known as the bullwhip effect. By playing both local and global versions, players can see how sub-optimal decisions at each stage compound across the entire chain.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 25

    THE BEER GAME

    Simulation Settings
    • Simplified supply chain
    – Selling cartons of beer

    • 4 Players -
    – Factory (warehouse)
    – Distributor
    – Wholesaler
    – Retailer
    Supply Channels
    Factory

    訂單
    Order
    Distributor

    Order
    訂單
    Wholesaler

    訂單
    Order
    Retailer
    Retailer
    • Order beer from wholesaler
    • Manages inventory levels
    • Sells/ships beer to fill end-consumer’s orders
    Wholesaler
    • Order beer from distributor
    • Manages inventory levels
    • Sells/ships beer to fill retailer’s orders
    Distributor
    • Order beer from factory warehouse
    • Manages inventory levels
    • Sells/ships beer to fill wholesaler’s orders
    Factory
    • Schedule beer production in factory
    • Manages finished goods inventory levels
    • Sells/ships beer to fill distributor’s orders
    Lead-times
    • Order processing delay
    • Transportation delay

    • Unit cycle time: one week


    • You can choose - Delay 1 and Delay 2
    Cost structure

    • Inventory holding cost:


    – 0.5 $ / carton -if inventory c/f to next week

    • Lost -sales cost


    – 1 $ /carton – if order not met

    Also un-fulfilled order to be c/f and met in the next


    period.
    What you should do every week
    • Receive beer from upstream supplier

    • Receive order from downstream customer

    • Ship the beer to fill the demand as much as possible

    • Backlogged orders must be met in subsequent week

    • Send an order to your upstream supplier


    Objectives
    • Minimize total channel costs

    – The total cost that the 4 SCM partners incur


    through the exercise
    LOCAL GAME
    Wholesaler Distributor
    Cum.
    Week Wholesaler Order Inv. D1 D2 Inv. D1 D2 B.O. R.O. TC
    1     4 4 4 4 4 0 0 0
    2 0   4 0 8 4 0 0 15 6
    3 0   0 0 12 0 12 0 10 12
    4 30   0 12 0 12 0 18 70 36
    5 30   12 12 0 0 0 36 35 84
    6 28   12 0 0 0 0 64 50 154
    7 0   0 0 0 0 0 64 25 218
    8 0   0 0 0 0 30 64 20 282
    9 0   0 0 0 30 30 64 15 346
    10 0   0 30 0 30 30 34 10 395
    11 0   30 30 0 30 30 4 0 429
    12 2   30 6 24 30 30 0 5 459
    13 3   6 3 51 30 30 0 0 488
    14 1   3 1 80 30 30 0 0 530
    15 10   1 10 100 30 30 0 0 586
    16 0   10 0 130 30 3 0 0 656
    17 6   0 6 154 3 0 0 0 736
    18 9   6 9 148 0 0 0 0 817
    19 2   9 2 146 0 0 0 0 896
    20 18   2 18 128 0 0 0 0 970
    Local Graph
    LOCAL SYSTEM
    GLOBAL GAME
    FIND THE
    DIFFERENCE…
    Local Picture

    Global Picture

    35

    30

    25
    R.O.
    20 W.O.
    15 D.O.
    F.O.
    10

    0
    1 3 5 7 9 11 13 15 17 19
    Summary
    PLAYER LOCAL COST GLOBAL
    $ COST $
    RETAILER 114 50

    WHOLESALER 334 422

    DISTRIBUTOR 970 485

    FACTORY 1915 345

    TOTAL 3333 1102


    Variability increases as one moves up the
    supply chain

    The BullWhip Effect 18


    The BullWhip Effect 19
    Fluctuating Prices
    • High-low pricing can be replaced with
     every day low prices (EDLP)

    • Special purchase contracts


     Ordering at regular intervals to better
    synchronize delivery and purchase.

    The BullWhip Effect 20


    The Bullwhip Effect
    • Order variability is amplified upstream in the
    supply chain.
    • Industry examples (P&G, HP).
    The Functional Approach C
    U
    S
    T
    O
    M
    E
    R
    S Sales S
    U
    P Distribution
    P
    L
    I Manufacturing
    E
    R
    S Purchasing

    • Traditional Approach: Functional, silo based !


    • No attempt to look holistically!
    C
    U
    Integrated Supply Chain Approach S
    T
    O
    M
    E
    R
    S

    Sales
    S
    U
    P Distribution
    P
    L
    I
    Manufacturing
    E
    R
    S
    Purchasing

    • Looks at the entire chain


    • Global rather than local focus
    • Integrated rather than fragmented approach
    Supply Chain Stages
    Supply Chain encompasses all activities associated with the -
    flow and transformation of materials and information
    from the raw material stage through to the end user.

    Supplier Manufacturer Distributor Retailer Customer


    SCM-Process flows
    OPERATIONS TECHNOLOGY

    Material
    Supplies I Production Distribution
    storage
    MATERIALS FLOW

    CASH
    Suppliers II Customers

    INFORMATION FLOW

    Supply Production Production Sales


    Planning scheduling planning forecasting
    INFORMATION TECHNOLOGY

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