Assignment 3 beer game PDF

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ASSIGNMENT 3 Beer Game Report

DECEMBER 8, 2019 ETM 594

Beer Game Report You can find all the data from the games you have played in excel sheets posted with the assignment. Files with NoIS tag are games with "no information" and with tag IS are the games with "information shared. Use these data and the following questions to write your report for the Beer Game.

1. Which supply chain partner has the highest cost? Why?

The Brewery has the highest costs (599.5) because it is the player farthest from the market and from the information relating to the demand. Since Retailer’ s order count has gradually increased, as a result of this trend Wholesaler, Distributor and Brewery costs have also increased. According to KPI performance units given below table, Brewery has the highest percentage of cost change.

2. Can you identify the bullwhip effect in the chain?

Although the number of Brewery Order increased after the 12th week, the number of Retailer Order is decreasing. Therefore, the number of orders in the Distributor is decreasing. Brewery’ s stocks are increasing due to this. At the 28th week, Brewery’s inventory ends, placing more orders to meet demand. As a result, Retailer cuts the demand and the Distributor reduces it. Brewery’s orders already left in stock.

3. Can you measure the magnitude of the bullwhip effect in the chain?

The measurement of bullwhip effect is important for both theoretical and experimental purposes. Variance ratio is the most commonly used for the recognition of the bullwhip effect. Variance ratio, demand in the lower and upper tiers of the supply chain, is the ratio of variance. If this ratio is greater than 1, there is a bullwhip effect in this step. The standard deviation rate is also important. However, differences between these two methods are not significant. A criterion named modified variance was offered to eliminate stacking effect in observed amplifications. These may have the effect of bullwhip effects which causes differentiation of various factors during some measurement procedures. Nevertheless, variance or standard deviation criteria are the most preferred criteria. Because these criteria are more successful in showing this phenomenon. In an another measurement technique, between the order from the retailer to the manufacturer and the final demand ratio was used. Thus, the data set in the final request was used. Another approach was to use the term peak order amplification. This term has been proposed against the response to the request. Peak order ratio has been used. These two measurements are used to smooth the isolated peaks in demand. Unlike real-life supply chains, but only in laboratory conditions,it is applicable. It is intended to observe the bullwhip effect on the number of situations in which demand variance has its grown. Finally, the term noise band gap is used. In this way, the bullwhip effect and capacity requirements to combat increasing demand are realized. The dissolution of the bullwhip effect has a great effect on efficiency of the Supply Chain. Beer Game-like scenario and simulative approach shows that, up to 50% of supply chain costs was eliminated by the bullwhip effect. 4. What are the causes of the bullwhip effect in your game?

The main reason for the bullwhip effect in the game is that we do not know how much stock we need to keep to meet orders in the 35 weeks period. As a result of the change in demand, some fluctuations occurred in stocks. For example, according to the table given below, customer’s demand can be changed on the 35 weeks period. Due to the demand expectations, other players of the game except customers will be affected by over or underreacting to the demand.

Since there is a lack of communication and sharing information among participants at our game in the supply chain exercise, it resulted in the bullwhip effect.The desire to react immediately to momentary but temporary fluctuations in demand and frequent updating of demand forecasts cause additional fluctuations in the supply chain. Poor performance or bad decision making by stakeholders along the chain resulted in the bullwhip effect. For example, given in the table below between 25th and 28th weeks, Distributor's Order changed dramatically and it is resulted in caused Brewery’ s orders to increase suddenly. It created a gap and triggered the bullwhip effect.

Changes in the nature of demand as well as unexpected or unplanned changes lead to the bullwhip effect; reasons such as inaccurate forecasting due to overreliance on historical data. For example, the following table between 23th and 25th weeks Wholesaler’ s inventory decrease was not something to be expected according to the historical Retailer’s orders.

5. How can you reduce/eliminate the bullwhip effect?

There are some ways to eliminate the Bullwhip Effect. One is that we can reduce lead time from 2 weeks to 1 week. So by doing this, in combination with improved visibility along the supply chain, can significantly and positively relieve the bullwhip effect. One way to reduce the bullwhip effect is through better information, either in the form of improved communication along the supply chain or probably better forecasts. Thanks to the forecasts, allocation of demand among customers based on past orders, not present orders, to reduce hoarding behavior when shortages occur. It would be better to create smaller order of Retailer on the 14th week. Not doing so, it caused more fluctuation and increased backlog. 6. If you reduce the bullwhip effect which supply chain partner benefits the most? Why?

In our case, all sides of the chain affected effectively. Because of the brewery is at the end of the chain, it affected more than other parts of the chain. If we reduce the bullwhip effect, brewery will benefit the most....