sdm simulation the beer game
TRANSCRIPT
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The Beer Game
Group XII
Indian Institute of Management
Kozhikode
ASHOK PRASAD K MAHTAAB KAJLA SACHIN KUMAR SUJA BARUA VARDHAN SINGH
PGP/14/268 PGP/14/280 PGP/14/294 PGP/14/306 PGP/14/311
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Agenda
2
Introduction Trends of Entities
CostSummary
Our Strategy Observations
Reasons for
substantialvariationamong other
groups
Sales & Distribution Management | Beer Game
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The Beer Game
3
Players Retailer, Wholesaler, Distributor and Manufacturer.
Goal
Minimize system-wide (chain) long-run average cost.
No information sharing among the players.
Lead-time:
2 weeks for the factory
4 weeks for other supply chain players
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Retailer’s Trend
4
The order placed follows the
customer’s order “1-1” policy followed initially --
order whatever amount isordered from your customer.
Towards the end the strategy
was to keep the currentinventory minimum(17-22week)
Zero level inventory(22-30week)
No backorders observed
Total cost
= 0.5*254+ 0
=127
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Wholesaler’s Trend
5
“1-1” policy followed --order whatever amount is
ordered from your retailer
No backorders observed
Reduction in the levels of inventory(21-30 week)
Total cost
= 0.5*322+0
=161
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Distributor’s Trend
6 Sales & Distribution Management | Beer Game
“1-1” policy followed --order whatever amount is
ordered from your
wholesaler
No backorders observed Total cost
= 0.5*340+0
=170
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Factory’s Trend
7
“1-1” policy followed --order whatever amount is
ordered from your
distributor
No backorders observed Total cost
= 0.5*356+0
= 178
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Comparison of different stakeholders in the
distribution channel
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Cost Summary
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Cost Calculation
Enitity Total Inventory Total Backlog Total Cost
Retailer 254 0 127
Wholesaler 322 0 161
Distributor 340 0 170
Factory & R/M 356 0 178
Channel Cost 636
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Observations
11 Sales & Distribution Management | Beer Game
Presence of buffer stock helped in reduction of inventorycosts in cases of demand volatility
No backlogs observed
No Bullwhip effect was observed as “1-1” policy wasfollowed
Rational behavior of intermediaries helped minimizeinformation distortion
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Reasons for substantial variation among other groups
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Inability to forecast demand efficiently
High demand uncertainty and variability
Information distortion
Player’s individual perception and mistrust
Lack of team play among intermediaries
Each player tried to minimize his inventory without considering the other
intermediaries
Resulted in backlogs
Irrational behaviour of intermediaries
Failure to foresee that orders once placed would come back after 4
weeks
Small variations amplify in the supply chain
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Q & A
13 Sales & Distribution Management | The Beer Game