Report on Beer Game Logistics Challenges

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The Product Distribution or "Beer Game" is an experiential exercise designed to help decision makers recognize the value of adopt a holistic and self-motivated approach to problem solving. The game was has been played by 4 of us which is retailer, wholesaler, distributor and factory. The procedure of the beer game involves dividing the players into teams of four who will run a beer industry. We assume the roles of beer retailer, beer wholesaler, beer distributor, and beer factory. Through pick lots style, Shanthini was playing as a retailer, Vingdeswaran was the wholesaler, distributor task was played by Ranjini and the factory belonged to Rebekah. After the duration of 25 weeks in the game, we have finally completed with total cost of 3552.. During each round of the game, each of us should construct one and only one choice: how many cases of beer to order from the upstream dealer. The retailer orders beer from the wholesaler, the wholesaler from the distributor, and the distributor from the factory. The factory decide how much to manufacture, rather than how much to order from a supplier. During the game, communication between us is limited. Inventory and backorder levels usually differ drastically from week to week. Our objective is slightly simple, each of the us has to meet the terms inward bound orders of beer by placing orders with the next upstream party. Order processing and filling delays are incorporated into the game to represent order processing, transportation, and manufacturing lead times.

The following represents the outcome of a distinctive beer game.

The bullwhip effect is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect. (Bullwhip effect, 2005). Bullwhip problem occur in this game. Bullwhip has more than one causes which is non-zero lead times and demand signal processing, order batching, price variations, and rationing and gaming.

Figure 1 shows the concept of bullwhip effect

2.1 Forecast of Demand
Since consumer demand doesn’t contrast much, there must be another reason for wildly fluctuating stock and backorder levels. This is due to the many “feedback loops, time delays, and non-linearity” in the system, coupled with the tendency of managers to react excessively to unpredicted changes in demand or inventory levels. Most of the trend is to over-react can be recognized to a lack of information regarding the method. In particular, we have no information of the consumer demand or of order policies utilized by the other team members. In addition, this lack of information prevents us from running together to recover overall performance. At the same time, we also did not predict the demand based on the order history from the company’s immediate customer.

In the week 3 until week 7, the customer’s demand went higher from 4 to 8.Because of the changes in demand, the distributor’s stock went negative from 12 to -3.This is due to the shortage of the inventory stock . This is so happen when factory order less because the demand still remain 8 in the following week but the inventory goes up higher from week 16 till the ending week. This is because we have ordered too many stocks till it goes higher till 18 to 33 on the week 16 and 17. Even though, we tried to start order less from week 17 as we predict the inventory will go lesser but when comes to week 18 the inventory increase dramatically.

Figure 2.1.1

2.2 Inventory Cost Control
In the beer game, we found that the most challenging task is the cost control management which including the storage cost, backorder cost, and time cost. Our objective is to provide a valuable learning experience about supply chain and...
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