Beer Game

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Problem description and analysis

The game that the group had to play was a simulation of a supply chain within the beer industry, starting with the factory and ending with the retailer.

Seen from the supply chain management point of view, the beer game reveals the importance of the communication and cooperation within the supply chain and highlights a certain behaviour that characterises the supply chains - the bullwhip effect.
Like all the supply chains, the goal of the game was to fulfil customer’s requirements and at the same time to accomplish the company’s objectives – e.g. lower stock, but still increased delivery reliability.

One of the most important issues of the game was that all of the links in the supply chain did not
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As from the graph below, it can be found out that by the end of week 24 the situation of the Retailer is reasonable well, only with few variations in the inventory. However, between weeks 27 and 44, the backlog is increasing rapidly due to higher customer orders and lower purchase orders. During weeks 44 and 45 the inventory is again increasing, when in week 48 the retailer is overstocked.

Why everything goes wrong from week 27? The answer might be given by comparing the customer orders with the purchase orders of the Retailer.
The goal of the Retailer, as for the Factory is to maintain lower stock, but manage to deliver all customer orders. For this reason, the Retailer bought an amount of beers higher that needed in the first 4 weeks, just for preparing the safety stock.
Afterwards, the customer’s order increased from 2 beers to 4 beers per week, like in the picture below. For the purpose of keeping an appropriate inventory, the Retailer made purchase orders at around 4 beers as well.
From week 17 to week 25 the purchase orders are decreasing concomitant with the increase of customer’s orders, and this will have negative consequence on the inventory. The stock is decreasing rapidly, and thus, by the end of week 44 the Retailer cannot fulfil customer’s orders.
Once again, like Factory’s operating experience, the Retailer

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