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Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

Homework I: Beer Game


Introduction
The beer game is a role-play supply chain simulation that lets students experience typical supply chain problems. In the beer game students enact a our stage supply chain. The task is to produce and deliver units of beer: the factory produces and the other three stages deliver the beer units until it reaches the customer at the downstream end of the chain. The aim of the players is rather simple: each of the four groups has to fulfill incoming orders of beer by placing orders with the next upstream party. Communication and collaboration are not allowed between supply chain stages, so players invariably create the so called bullwhip effect.

Objectives
Introduce people to the key principle "structure produces behavior" Experience the pressures of playing a role in a complex system To meet customer demand for cases of beer with minimal expenditure on back orders and inventory

Scenario
The software used is BeerGame 1.10 by Philip Kaminsky and David Simchi-Levi.

Beer Game Applications

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

There are four major player with different roles applied in this applications: 1. 2. 3. 4. Retailer Wholesaler Distributor Factory

Overview of selected player from applications Six type of inventory manage policies applied in this application as displayed below

In this game, there are 10 groups assigned with different selected player and policy. Two bigger groups have 3 smaller original groups (subgroups) and one group have 4 smaller original groups. The work assigned for groups (subgroups) given as follows: The first presentation group: group 1, group 2, and group 3. The second presentation group: group 4, group 5, and group 6. The third presentation group: group 7, group 8, group 9 and group 10.

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

Each subgroup will be assigned to 2 policies and 1 role as follow:

GROUP A GROUP B

Subgroup 1 Subgroup 4 Subgroup 7

Subgroup 2 Subgroup 5 Subgroup 8

Subgroup 3 Subgroup 6 Subgroup 9 Subgroup 10

GROUP C

From the figure above, every smaller group has assigned different policy. Bigger Group Category Group A Group 1 Retailer Select s-S inventory policy for wholesaler, distributor and factory to run the system (the policy is for the computer, not the player), and then select s-Q policy to run it again. Group 4 Wholesaler Select s-S inventory policy for Sub Group Number Role (Selected Player) Policy

retailer, distributor and factory to run the system (the policy is for the computer, not the player), and then select s-Q policy to run it again. Group 7 Distributor Select s-S inventory policy for

retailer, wholesaler and factory to run the system (the policy is for the computer, not the player), and then select s-Q policy to run it again.

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

Group B

Group 3

Retailer

Select

order

to

policy

for

wholesaler, distributor and factory to run the system (the policy is for the computer, not the player), and then select order Q policy to run it again. Group 6 Wholesaler Select order to S policy for retailer, distributor and factory to run the system (the policy is for the computer, not the player), and then select order Q policy to run it again. Group 9 Distributor Select order to S policy for retailer, wholesaler and factory to run the system (the policy is for the computer, not the player), and then select order Q policy to run it again. Group C Group 2 Retailer Select Updates s policy for wholesaler, distributor and factory to run the system, and then select Echelon policy to run it again Group 5 Wholesaler Select Updates s policy for retailer, distributor and factory to run the system, and then select Echelon policy to run it again Group 8 Distributor Select Updates s policy for retailer, wholesaler and factory to run the system, and then select Echelon policy to run it again. Group 10 Factory Select Updates s policy for retailer, wholesaler and distributor to run the system, and then select Echelon policy to run it again.

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

There are five scenarios as follow: 1. Default

2.

Centralized

3.

Short Lead Time

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

4.

Demand

Parameter definition: Initial demand mean: 6 Initial demand standard deviation: 1(low) For weeks 1 through: 25 Final demand mean: 6 Final demand standard deviation: 2(high) 5. Global Information

Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

Assignment
Each subgroup should applies the same policy under a bigger group to run 50 periods representing for 1 year if 1 periods stands for 1 week. After 1 round, each subgroup changes their roles and plays it again, but make sure that 1 subgroup should plays as Factory role this time. Thus, each group has to play 2 runs in a task. The subgroups within a bigger group need to discuss and present their findings of each result from different scenarios. You can analyze the results by using the graph and reports function in software. A summary from bigger group is required. After finishing all the tasks below, please choose 4 members from the bigger group to present the overall results for 15 minutes.

Question 1
Please apply the first assigned policy to run for 1 round. What do you find in the end? What are the important variable factors influencing supply chain management decisions in this game?

Question 2
Please apply the second assigned policy to run again. Compare the result of each roles inventory, backorder, order and cost with task 1. Try to explain which one is better and why?

Question 3
Use the first assigned policy and apply Demand scenarios to run for 1 round; what is the relationship between cost and variance?

Question 4
Use the first assigned policy and apply centralized scenario, short lead time scenario and global information scenario respectively. Compare the result of inventory, backorder, order and cost of each scenarios with default scenario, Try to make explanation by using figures.

Note
The answers of all questions should include each subgroup result and an integrated result of them. Each big group (group A, B, and C) will do presentation to show their discussion result. Please make it in power point file, and submit to TA before Monday April 8th, 11.59am.
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Supply Chain Management Course, Winter 2013

Professor Shuo-Yan Chou

The presentation will be on Monday April 8th, 2013. o o o 1st Presenter: Group C 2nd Presenter: Group A 3rd Presenter: Group B