26-04-2012, 11:30 AM
The Beer Game
The-Beer-Game.pdf (Size: 393.7 KB / Downloads: 33)
Objectives
The Objectives are:
– to provide a valuable learning
experience about supply chains
– to have fun
• The game is not designed with any
specific industry in mind
• Rather, it is designed to elicit a certain
behaviour that is characteristic of
most supply chains.
Purpose
• The purpose of the Beer Game is to
experience systemic effects and to
introduce the need for supply chain and
network management.
• Specifically it shows :
– How single parts in a system influence each
other.
– How individual thinking differs from systemic
thinking (network thinking).
– Potentials for systems optimization and the use
of information systems.
4
Supply Channels
Factory
Distributor
Wholesaler
Retailer
訂單
訂單
訂單
Orde
r
Orde
r
Orde
r
Order
processing
delays
Transport
delays
From
shop floor
To
Consumers
FFaaccttoorryy Distribut
or
Wholesale
r
RReettaaiilleerr
Delay Delay Delay Delay
The Game Setup
• The Beer Game supply chain consists of four
stages:
– The retailer has to fulfil the end consumer’s
orders.
– The wholesaler has to fulfil the retailer’s orders.
– The distributor has to fulfil the wholesaler’s
orders.
– The factory has to produce the beer to fulfil the
Costs
There are two different kinds of cost:
– Inventory cost: Items in stock cost $ 0.50 per week in
holding costs.
– Backorder cost: If an incoming order cannot be (fully)
fulfilled, items are outstanding and have to be put on
“backorder” to be fulfilled in the following week(s).
Each item on backorder costs $ 1.00 per week.
What is a backorder?
If an incoming order cannot be fully fulfilled due to a lack of
available items in the inventory, items go on backorder.
What happens in the next week?
In the following week, you will add the old backorder to the
new incoming order to calculate the amount “to ship”.
Again, if the available inventory is too little to fulfil the
amount “to ship”, items have to be put on backorder and
will cost $ 1.00 per item.
FFaaccttoorryy Distribut
or
Wholesale
r
RReettaaiilleerr
Delay Delay Delay Delay
General Rules
• No communication is allowed between supply chain
groups, supply chain groups must not talk to each
other at any time!
– Especially the customer demand is only known to the
retailer.
• If stock is available, an order has to be fulfilled.
• Every order has to be fulfilled, either in the current
week (if enough stock is available) or in one of the
next weeks (items go on backorder).
• Either the inventory or the backorder, one of them is
always zero (0)!
LET’S HAVE A DEMO..
LET’S PLAY!
The Beer Game
Results
Result Reasonable Score Very Good
Retailer 900 1000
Wholesaler 1500 1100
Distributor 2300 1200
Manufacturer 3400 1350
Total 8100 4650
Discussion Questions
• Did you feel yourself controlled by
forces in the system from time to
time? Or did you feel in control?
• Did you find yourself "blaming" the
groups next to you for your problems?
• Did you feel desperation at any time?
•
General Observations
• One or more players cut orders in an
attempt to reduce inventory
• Suppliers see a reduction in order size
as a signal of declining demand and
reduce their orders even more
• Meanwhile, retailers see a jump in
consumer demand
• Retailers order extra in an attempt to
fill the pipeline
General Observations
• Suppliers see higher orders as a signal of
increasing demand just when their
inventory is being reduced
• Backlogs develop and build !
• In the face of growing backlogs, players
grow impatient and increase their orders
- forgetting that all previous orders will
eventually be filled
• Backlog situations eventually turn into
excess inventory situations as previous
over-orders are filled
The Bullwhip Effect
• The bullwhip effect is mainly caused by
three underlying problems:
1.a lack of information,
2.the structure of the supply chain and
3.a lack of collaboration.
Lack of Information
• In the beergame no information except for the
order amount is perpetuated up the supply
chain. Hence, most information about customer
demand is quickly lost upstream in the supply
chain.
• With these characteristics the beergame simulates
supply chains with low levels of trust, where only
little information is being shared between the
parties.
• Without actual customer demand data, all
forecasting has to rely solely on the incoming
orders at each supply chain stage. In reality, in
such a situation traditional forecasting methods
and stock keeping strategies contribute to
creating the bullwhip effect.
Supply Chain Structure
• The supply chain structure itself contributes to the
bullwhip effect. The longer the lead time, i.e. the longer
it takes for an order to travel upstream and the
subsequent delivery to travel downstream, the more
aggravated the bullwhip effect is likely to be.
• With traditional ordering, the point in time where an order
is typically placed (the order point) is usually calculated
by multiplying the forecasted demand with the lead
time plus the safety stock amount, so that an order is
placed so far in advance as to ensure service level
during the time until the delivery is expected to arrive.
• Hence, the longer the lead time is, the more pronounced
an order will be as an reaction to an increase in
forecasted demand (especially in conjunction with
updating the safety stock levels, see above), which
again contributes to the bullwhip effect
Local Optimization
• Local optimisation, in terms of local forecasting and individual
cost optimisation, and a lack of cooperation are at the heart
of the bullwhip problem.
• A good example for local optimisation is the batch order
phenomenon. In practice, ordering entails fix cost, e.g.
ordering in full truck loads is cheaper then ordering smaller
amounts. Furthermore, many suppliers offer volume
discounts when ordering larger amounts.
• Hence, there is a certain incentive for individual players to hold
back orders and only place aggregate orders. This behaviour
however aggravates the problem of demand forecasting,
because very little information about actual demand is
transported in such batch orders.
• And batch ordering, of course, contributes directly to the
bullwhip effect by unnecessarily inflating the orders
Beer Game Lessons
• Inventory cost money, but may help
increase service levels
• Lags cause problems and longer supply
chains cause problems
• Need information systems to monitor
each stage in the chain
• Also, need cooperation in the channel