Beer Game – Supply Chain Simulation

Beer Game –Supply Chain Simulation Dr. CK Farn 2006 Spring

Simulation Settings • Overly simplified supply chain • Selling kegs of beer • Roles • Factory (warehouse) • Distributor • Wholesaler • Retailer 中央大學。范錚強

Supply Channels From shop floor Transport delays Order Order Order processing delays Order To Consumers 中央大學。范錚強

Retailer • Order beer from wholesaler • Manages inventory levels • Sells/ships beer to fill end-consumer’s orders 中央大學。范錚強

Wholesaler • Order beer from distributor • Manages inventory levels • Sells/ships beer to fill retailer’s orders 中央大學。范錚強

Distributor • Order beer from factory warehouse • Manages inventory levels • Sells/ships beer to fill wholesaler’s orders 中央大學。范錚強

Factory • Schedule beer production in factory • Manages finished goods inventory levels • Sells/ships beer to fill distributor’s orders 中央大學。范錚強

Leadtimes • Order processing delay • Transportation delay • Unit cycle time: one week 中央大學。范錚強

Cost structure • Inventory holding cost: • $1 for each keg of beer in the inventory at the end of each week • Lost of sales cost • $2 for each keg of beer that is backlogged at the end of each week 中央大學。范錚強

What you should do every week • Receive beer from upstream supplier • Receive order from downstream customer • Ship the beer to fill the demand as much as possible, as inventory permit • Backlogged orders must be filled in subsequent week, as inventory permit • Send an order to your upstream supplier 中央大學。范錚強

Objectives • Minimize total channel costs • The total cost that the four members incurred through the exercise 中央大學。范錚強

Scenarios • 1. lead time = 3 weeks • Order delay = 2, transport delay = 1 • 2. lead time = 1 weeks • Order delay = 1, transport delay = 0 • 3. lead time = 3 weeks • Visibility– weekly POS data, downstream inventory level • 4. lead time = 3 weeks • Known average weekly demand and demand pattern • 5. lead time = 3 weeks • 4-week Rolling forecast available, 90% accurate 中央大學。范錚強

Beer Game Site • http://203.68.134.3/~ckfarn/BeerGame/ 中央大學。范錚強

Round #2 • lead time = 1 weeks • Order delay = 1, transport delay = 0 • Change of roles • R  W • W  D • D  F • F  R 中央大學。范錚強

Round #3 • lead time = 3 weeks • Order delay = 2, transport delay = 1 • Visibility– weekly POS data, downstream inventory level • Change of roles again • R  W • W  D • D  F • F  R 中央大學。范錚強

Round #4 • lead time = 3 weeks • Order delay = 2, transport delay = 1 • Average demand = 10 • Winter weeks 1-6; summer weeks 10-18; winter weeks 22-25 • Change of roles again • R  W • W  D • D  F • F  R 中央大學。范錚強

Round #5 • lead time = 3 weeks • Order delay = 2, transport delay = 1 • Rolling forecast • Change of roles again • R  W • W  D • D  F • F  R 中央大學。范錚強

Rolling forecast 中央大學。范錚強

Rolling forecast 2 中央大學。范錚強

Rolling forecast 3 中央大學。范錚強

Case preparation • Case 1: Prepare an analysis of the usage of the concepts you learnt through the Beer Game. • a. What went wrong? How can the performance be improved? • b. What are the important factors affecting supply chain performance? • c. How can IT help in improving supply chain performance? 中央大學。范錚強

Beer Game – Supply Chain Simulation