simulation

Topics: Decision making, Risk, Decision theory Pages: 3 (813 words) Published: July 11, 2014


1. What did you observe in inventory and back order levels when you play the game in uncoordinated and coordinated modes? What are the underlying reasons for the problems associated with uncoordinated decision-making? Based on the results you found in the previous part, list the potential benefits of coordination. (max 0.75 page) 2. What are the steps companies can take in order to reduce the problems associated with uncoordinated decision-making? Discuss also the potential implementation issues related to each of these steps. (max 0.75 page)

1. The inventory and backorders increased for every participant in the supply chain except for the backorder of the retailer in coordinated modes. The retailer had an average backorder of 22.31 throughout the uncoordinated mode and 22 in the coordinated mode. The underlying reason for the problem associated with uncoordinated decision-making is essentially the lack of communication between different participants and the demand uncertainty that existed throughout the game. Moreover, misperception of feedback and time delays within the uncoordinated mode, caused the limited quality in decision making. Furthermore, one may identify perceived risk of individual players' bounded rationality as one of the underlying reasons that had impact on the buildup of backorders. In addition to this, a prevalent issue throughout the first 18 weeks was panic ordering reactions after unmet demand, which consequently contributed to the high inventory cost, ergo the bullwhip effect.  First of all, during coordination, the retailer can communicate the current demand to the different individual participants of the supply chain. Therefore consideration of lead time can be incorporated in the decision making process and forecasting of future demand. Secondly, the option of communication and collusion should in the best case scenario enable the individual participants to efficiently address the demand and the costs involved....
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