Beer Game Bullwhip Effect

The Beer Game simulates the flow of supply chain management that occurs in the real world. While playing the practice round Beer Game and the two rounds with a group, the “bullwhip effect” was a clear malfunction in our supply chain. As backlog started to accumulate and an exponential amount of inventory began to pile up, it was evident we were affected by the bullwhip effect. The bullwhip effect is describes to be the increasing variation of demand going upstream the supply chain from consumers to suppliers. Coordination between the manufactures, wholesaler, distributor and retailer was key to playing a successful round. However, by not communicating with one another and not understanding the demand that exists, increase of costs and backlogs begin to spiral out of control. Each player controls their particular section in the supply chain, though, each player can influence the supply chain as a whole by not ordering enough or perhaps ordering too much. It was obvious that the decisions made by each player was impacting the performance of the other in the chain. We found that the longer the lead time, the larger the variation. This extended lead time impacts the manufacture to worry, and then causes them to increase their production in order to meet their forecasting predictions. Their forecasting predictions are then a result of assumptions that never really existed in the first place. As playing the role of the Retailer, I was unable to meet the consistent demands of consumers. The bullwhip effect was noticed as my level of inventory increased to over 111, and shooting up my costs to over $2,400. Thus, it was clear and obvious that every division in the supply chain plays a key role. It ultimately became a domino effect w...

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The allocation, in regards to manufacturing production, is a particular based on the forecasts we make based on the past trends. Referring back to the discussion of long lead times, it was clear with shorter lead times, we as a supply chain team, can meet the demands just as expected. We would need to ensure that we don’t over produce nor under produce, however, it took a while for us to grasp this concept.

My experience was the Beer Game was interesting. Though it was a bit frustrating, it allowed me to understand the bigger picture of how supply chain management works. In addition to, it helped me to understand how to manage inventory while decreasing cost at the same time. Knowing that your team can work together to better their supply chain flow to achieve better results brings a confident feeling knowing you can overcome the bullwhip effect!