Root Beer Game Observations

Root Beer Game - Observations

Root Beer Game - Observations

Sonia Apsingekar PGP-12-068

Shaily Agrawal PGP-12-218

Pratik Gosar PGP-12-056

Priyanka Bakshi PGP-12-061

Sonia Apsingekar PGP-12-068

Shaily Agrawal PGP-12-218

Pratik Gosar PGP-12-056

Priyanka Bakshi PGP-12-061

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Root Beer Simulation- Observations

The classic root beer simulation provided us a good overview of challenges inherent in any supply chain management. All the four roles had a common goal of minimizing total cost being incurred inclusive of inventory cost and back log cost. The simulation pointed towards an important fact that meeting customer demand is the most important concern for any business. Any back log in meeting customer demands or expectations amount to greater penalty than the cost of over production/ cost of holding inventory. However, even inventory holding cost forms a substantial part of total cost to company and is sufficient to put any company out of business if increased beyond a certain limit.

Limited visibility and communication along the chain is a common scenario whereby factory at one end of supply chain does not have sufficient information about the changing patterns in consumer demand. This coupled with shipping delays often lead to severe shortages and overstocks despite consumer demand being more or less steady in long run with a few unanticipated spikes and dips.

The simulation and data analysis points towards existence of a phenomenon called Blue whip Effect common in forecast driven distribution channels. It implies amplification of orders as you go up the supply chain. It is one of the major reasons for inefficiencies in any supply chain and increases as the lead time increases. Some of the causes of blue whip effect noticed during simulation include panic order reactions after unmet demand which led to piling up of inventory to the tune of approximately 4.8million units in factory. You...