Beer Game Report

Data observation：

Variation of the inventory and backorder increases up from customer to supplier along the supply chain of beer. The fluctuation of the supplier always has delay when comparing with its customer. People try to get rid of some of the inventory in order to manage their costs; hence they often only place small orders in the beginning (for an example see weeks 1-12). Consequently, when the customer demand jumps to the higher level the supply chain has adjusted to a low demand scenario. After the steep increase the retailer group tends to wait one or two rounds in order to see if the increase is permanent. When they then place the first large order they invariably initiate a bullwhip effect that perpetuates through-out the chain. Typically, the order amount increases with every stage in the supply chain. What happens then is that the groups move deeply into backorder, because due to the delivery delays it takes quite some time for the beer to move through the supply chain to the retail end. Getting increasingly desperate players often try to send signals and place more large orders; in the end we typically lose track of what we have ordered and order way too much. The consequence is that the supply chain is flooded with beer and the inventories overflow (see weeks 21-27). The effect is that people cease ordering entirely; e.g. a lot of very small orders are placed. This is especially true for the higher stages of the supply chain. In the end, while the retailer groups often manage to stabilize their business, the higher stages have no idea of the actual customer demand and are left frustrated. Figure 1 shows the order distribution over 32 weeks and a typical bullwhip effect. This translates into an increase in inventory fluctuation as well.

Reason analysis:

The bullwhip effect, as simulated in the beer game, is mainly caused by three underlying problems: 1) lack of information, 2) the structure of the supply chain and 3) lack of collaboration and...