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2007-10-11chenxf@fudan.edu.cn1BeerGamePh.DXiangfengChen2007-10-11chenxf@fudan.edu.cn2•TheBeerGame•TheBullwhipEffect•SupplyChainManagement•counteractthe“Bullwhip”Effect2007-10-11chenxf@fudan.edu.cn3SupplyOperationDistributionPlant1Plant2Plant3Warehouse/D.C.Warehouse/D.C.Warehouse/D.C.ABCPhysicalsupplyMaterialsManagementPhysicalDistributionMarketingLogisticsRawMaterialsMovement/TransportationMovement/TransportationManufacturingWarehousing/DistributionMarketWholesale/RetailWholesale/RetailWholesale/RetailMovement/TransportationMovement/TransportationIIIIII2007-10-11chenxf@fudan.edu.cn4WhatistheBeerGameallabout?•BeerGame-Amicrocosmofhowrealorganizationfunctions-firstdevelopedin1960sattheMITSloanSchoolofManagement.•Itisasystemforproducinganddistributingasinglebrandofbeer(singleproductsupplychain).•Itisa“laboratoryreplica”ofarealsetting,ratherthanrealityitself,wecanisolatethedisabilitiesandtheircausesmoresharplythanispossibleinrealorganizations.•Itrevealsthattheproblemoriginatesinbasicwaysofthinkingandinteracting,morethaninpeculiaritiesoforganizationstructureandpolicy.Thebasicrulesofourbusinessesstillapply!2007-10-11chenxf@fudan.edu.cn5TheMITBeerGame•Players–Retailer,Wholesaler,DistributorandManufacturer.•Goal–Minimizesystem-wide(chain)long-runaveragecost.•Informationsharing:Mail.•Demand:Deterministic.•Costs–Holdingcost:$0.50/case/week.–Penaltycost:$1.00/case/week.•Leadtime:2weeksphysicaldelay2007-10-11chenxf@fudan.edu.cn6TheBeerGamelayout44444RetailerWholesalerDistributorFactoryCustomerSupplier2007-10-11chenxf@fudan.edu.cn7RetailerCurrentInventoryCustomerordersOrderssoldtocustomerOrdersPlacedShippingDelay2007-10-11chenxf@fudan.edu.cn8WholesalerCurrentInventoryIncomingOrdersOrdersPlacedShippingDelayShippingDelay2007-10-11chenxf@fudan.edu.cn9DistributorCurrentInventoryIncomingOrdersOrdersPlacedShippingDelayShippingDelay2007-10-11chenxf@fudan.edu.cn10FactoryCurrentInventoryIncomingOrdersProductionDelayShippingDelayProductionRequestsProductionDelayRawMaterials2007-10-11chenxf@fudan.edu.cn11Timing1.Newshipmentsdelivered.2.Ordersarrive.3.Fillordersplusbacklog.4.Decidehowmuchtoorder.5.Calculateinventorycosts.2007-10-11chenxf@fudan.edu.cn120、InitializingtheboardCurrentInventoryhhhhhhhhhhhhRetailerOrderssoldtoCustomersCurrentInventoryhhhhhhhhhhhhWholesalerhhhhhhhhCurrentInventoryhhhhhhhhhhhhDistributorCurrentInventoryhhhhhhhhhhhhFactoryhhhhhhhhhhhhhhhhShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayhhhhProductionDelayhhhhProductionDelayRawmaterials44OrdersPlacedIncomingorders44OrdersPlacedIncomingorders44OrdersPlacedIncomingorders4ProductionRequests121212122007-10-11chenxf@fudan.edu.cn131、ReceiveinventoryandadvanceshippingdelaysFactoryadvancetheproductiondelayCurrentInventoryhhhhhhhhhhhhhhhhRetailerOrderssoldtoCustomersCurrentInventoryhhhhhhhhhhhhhhhhWholesalerhhhhCurrentInventoryhhhhhhhhhhhhhhhhDistributorCurrentInventoryhhhhhhhhhhhhhhhhFactoryhhhhhhhhShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayhhhhProductionDelayProductionDelayRawmaterials44OrdersPlacedIncomingorders44OrdersPlacedIncomingorders44OrdersPlacedIncomingorders4ProductionRequestsWeek1Order161616162007-10-11chenxf@fudan.edu.cn142、LookatincomingordersandfillordersAllincomingordersplusordersinbacklogmustbefilledCurrentInventoryhhhhhhhhhhhhRetailerUsedWeek1orderOrderssoldtoCustomersCurrentInventoryhhhhhhhhhhhhWholesalerhhhhCurrentInventoryhhhhhhhhhhhhDistributorCurrentInventoryhhhhhhhhhhhhFactoryhhhhhhhhShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayhhhhProductionDelayProductionDelayRawmaterials4OrdersPlacedIncomingorders4OrdersPlacedIncomingorders4OrdersPlacedIncomingordersProductionRequestshhhhhhhhhhhh412121212hhhh2007-10-11chenxf@fudan.edu.cn153、Recordyourinventoryorbacklog4、Advancetheorderslips;andthebrewerybrewsCurrentInventoryhhhhhhhhhhhhRetailerUsedWeek1orderOrderssoldtoCustomersCurrentInventoryhhhhhhhhhhhhWholesalerhhhhCurrentInventoryhhhhhhhhhhhhDistributorCurrentInventoryhhhhhhhhhhhhFactoryhhhhhhhhShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayhhhhProductionDelayProductionDelayRawmaterials4OrdersPlacedIncomingorders4OrdersPlacedIncomingorders4OrdersPlacedIncomingordersProductionRequestshhhhhhhhhhhhhhhh12121212hhhh2007-10-11chenxf@fudan.edu.cn165、Placeandrecordyourorders,FactoryplacesandrecordsitsproductionrequestsCurrentInventoryhhhhhhhhhhhhRetailerUsedWeek1orderOrderssoldtoCustomersCurrentInventoryhhhhhhhhhhhhWholesalerhhhhhhhhCurrentInventoryhhhhhhhhhhhhDistributorCurrentInventoryhhhhhhhhhhhhFactoryhhhhhhhhhhhhhhhhShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayShippingdelayhhhhProductionDelayhhhhProductionDelayRawmaterialsneworder4OrdersPlacedIncomingorders4OrdersPlacedIncomingorders4OrdersPlacedIncomingordersNeworderProductionRequestsneworderneworder121212122007-10-11chenxf@fudan.edu.cn17•TheBeerGame•TheBullwhipEffect•SupplyChainManagement•counteractthe“Bullwhip”Effect2007-10-11chenxf@fudan.edu.cn18TheBeerGa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