Beer Game Reflection
In the game, I was assigned to be the factory. The objective of the game was to be able to supply products to the customers at the same time minimize inventory. In a nutshell, the demand of the customer should be supplied immediately by each entity in the supply chain.
Being the factory, I felt that I was actually controlled by the other entities. It is through their orders that I should decide how many raw materials to get to be able to supply their needs. If I did not give them the exact order, I would have costs due to the back order cost. If I got too much raw materials, I would still get costs due to the holding costs. At first, we all blamed the wholesaler for ordering too much. Our group was said to be an outlier. This is because the wholesaler suddenly ordered 100 pieces of products. After that everyone in the supply chain was affected. The cost of each entity in the supply chain was very high due to the excess inventory that everyone had. After ordering 100 pieces, the factory had nothing to do anymore. But because of assuming that the customer would be ordering large quantities constantly, we had to prepare more stocks just in case. So, we ordered more products and in the end, we had a lot of holding costs. This kind of action can be attributed to thinking linearly. It can be assumed that the reason why the wholesaler bought immediately 100 pieces of product is because the cost of holding the product is only half the cost of back order. Thinking that he would have no back order, he ordered a lot of inventory. Looking at it, holding cost may be cheaper as compared to back order costs, but having too much inventory would also make holding cost become bigger costs. This means that in order to have the least cost possible, your inventory should match the demand of the customer.
In the end, it was seen that the customer actually had ordered almost the same quantity over the period