Team Game

Beer Game
Goals
to have an essential and valuable experience to learn how the supply chain works to have fun

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2011 GCA Susana Relvas and Ana Carvalho, 1

Introduction
Simulation game The origin is dated in 60s and from MIT Initially: physical game Nowadays: PC and online versions

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Introduction

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2011 GCA Susana Relvas and Ana Carvalho, 3

Rules
4 teams per game = 4 chain entities OBJECTIVE: Minimize Total Cost
Maintaining a lower inventory level Satisfying all orders

Time horizon: 1 year (52 weeks) 1 item =

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Rules
Costs (per week)
Unitary storage cost: 5 Backlog cost for one unit: 10

Processing time intervals

2 weeks between shipments and deliveries

Information lead time

2 weeks between shipments and deliveries
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Rules
In each round We receive goods from our supplier We receive orders from our customer We order to our supplier We send shipments to our customers Decision: how much to order?
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How to play

http://scgames.bauer.uh.edu/

Preference for Internet Explorer 6, 7 or 8

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2011 GCA Susana Relvas and Ana Carvalho, 7

How to play
http://davinci.tamu.edu/beergame/v1/

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2011 GCA Susana Relvas and Ana Carvalho, 8

How to play
http://davinci.tamu.edu/beergame/v1/

DEG - IST

2011 GCA Susana Relvas and Ana Carvalho, 9

How to play
http://davinci.tamu.edu/beergame/v1/

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2011 GCA Susana Relvas and Ana Carvalho, 10

How to play
http://davinci.tamu.edu/beergame/v1/

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2011 GCA Susana Relvas and Ana Carvalho, 11

How to play
http://davinci.tamu.edu/beergame/v1/

GCA
DEG - IST 2011 GCA Susana Relvas and Ana Carvalho, 12

How to play
http://davinci.tamu.edu/beergame/v1/

DEG - IST

2011 GCA Susana Relvas and Ana Carvalho, 13

How to play
http://davinci.tamu.edu/beergame/v1/

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2011 GCA Susana Relvas and Ana Carvalho, 14

How to play
http://davinci.tamu.edu/beergame/v1/

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2011 GCA Susana Relvas and Ana Carvalho, 15

Results
Who has the fault??...
PC our supplier our customer final consumer our team the system

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Results analysis
What happened to customer demand?
10 9 8 Demand (Units) 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Time (Weeks)

Several thousands of game analysis show that even if not all players place the same orders, everyone react approximately at the same time.
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Results analysis
What happened to customer demand?

Centralized Supply Chain- Second Week of Game

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Results Analysis
What cost the most? Cause - Effect
Place an higher order

Stockout

Suplier did not accomplished the orders Demand is tricky My orders are tricky Delays in the system cause problems

New supplier

Remove uncertainty New decision criteria Different system Minimize backlog

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Results Analysis
Decentralized
Day Team Factory Distributor Wholesaler Retailer Total Game 1 13380 11500 11370 4275 40525 Tuesday Game 2 2170 10535 10550 5045 28300 Game 3 7265 15300 11205 2605 36375 Thursday Game 4 3470 4975 8245 4960 21650

Placement

4th

2nd

3rd

1st

Centralized
Day Team Factory Distributor Wholesaler Retailer Total Game 1 120 1115 1045 725 3005 Tuesday Game 2 140 3515 2820 1110 7585 Game 3 2575 4755 4890 4455 16675 Thursday Game 4 925 3110 2595 1995 8625

Placement

1st

2nd

4th

3rd

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Results Analysis
Decentralized Supply Chain

Centralized Supply Chain

Bullwhip Effect Reduction

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Results Analysis
Game 1 Game 2

Game 3

Game 4

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Results Analysis
Game 1 Game 2

Game 3

Game 4

Lower Variability- > Lower Bullwhip Effect

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Results Analysis
What is the best integration strategy for this SC?

Supplier- Factory

Other Entities

Push-Pull Strategy
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Results Analysis
How many units should be kept as safety stock ?

Safety stock: z STD L

Retailer: Standard deviation: 2.48 units Service level 98%: 2.05 Lead Time: 1 week SS= 10 units => 10/8 = 1,3 weeks Wholesaler: Standard deviation: 2.48 units Service level 98%: 2.05 Lead Time: 5 weeks SStotal= 25 units SSWh = 15 units

Distributer: Standard deviation: 2.48 units Service level 98%: 2.05 Lead Time: 9 weeks SStotal= 46 units SSDi = 21 units
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Results Analysis
What happens when you decide to optimize each entity individually?
Local Optimization

Global Optimization -> Reduce variability of orders across SC

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Conclusions
Play for Minimize costs and How to perform a certain position in a system Results emphasize: Bullwhip effect The value of information Integration Strategies Safety Stock Global optimization
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