THE NEAR BEER GAME EXERCISE
At the beginning of the game customers are ordering ten cases worth raw materials. In week two, demand increases to fifteen cases per week and remains at fifteen cases for the remainder of the simulation. The game ends when you manage to get your supply chain back in equilibrium for fifteen cases of beer. Your goal is to see how many weeks it takes you, and see if you can bring the supply chain back into equilibrium without the bullwhip oscillations of stock-outs followed by over-supply.
DIRECTIONS:
Figure 1: Near Bear Game Tab Screen Capture Example
QUESTIONS:
answer the following questions about your Near Bear gameplay:
Part A
Part B (20 marks)
Part C
Part A
How many weeks did it take you to reach equilibrium?
I reached to equilibrium in just week 5.
Describe what inventory shortages you experienced?
Here there is 3 week of cycle time from the Raw Material Order to the conversion of it to Finished Goods Inventory. So, for the first 3 week already ordered and prepared 10 cases will be fulfilled and our new raw material orders will come on to effect from the fourth week. Please find the below table to get the idea of my raw material orders and finished goods inventory in every week.
Week | New Customer Orders | Back Orders | Finished Goods Inventory | Unfilled Orders | Raw Materials Order |
1 | 10 | 0 | 10 | 0 | 25 |
2 | 15 | 0 | 10 | 5 | 15 |
3 | 15 | 5 | 10 | 10 | 15 |
4 | 15 | 10 | 25 | 0 | 15 |
5 | 15 | 0 | 15 | 0 | 15 |
So According to this table, During 2nd-3rd week There is a shortage of 5 and 10 beer cases.
Did you ever have more inventory than customer orders? Why or why not? and How did you adjust your production/raw orders to meet customer demand?
No, I haven't had more inventory than customer orders ever. Because,I calculated the demand for the first 3 weeks as it was known. It will be 10+15+15 = 40. In opposite to that, the finished goods inventory we will be having 10+10+10= 30. So, the Unfulfilled orders will be 10, and the demand for 4th week will also be 15. So, the required finished goods inventory for 4th week will be 15+10=25. Here, the lead time from order of the raw material to the conversion to finished goods inventory is 3 weeks. So, I already ordered 25 raw material which will be sufficient. After that I always ordered 15 raw material to match the exact 15 demand from 5th week. This is how I adjusted the production and raw material orders.
Part B
Bullwhip Effect: The variations in the customer demand when transferred upstream in the supply chain towards the distributors than to manufacturer and then to suppliers, the degree of variation increases drastically. As we can see in this example, the increase in customer demand resulted in to uneven orders to the suppliers for raw materials.
Graph Captures from the Near Beer Game
Importance of demand forecasting and the Forecasting techniques used within the supply chain
1. It regulates the distribution of resources evenly across the functions. 2. It also helps in reducing the wastage of resources. 3. It serves as a direction to production quantity and raw material ordering. 4. It reduces the inventory and hence the inventory handling cost. 5. It helps in achieving Just In Time Manufacturing practice. 6. It reduces the business risk.
Forecasting Techniques are of two types:
1. Qualitative Technique: Delphi Method
2. Quantitative Technique: Moving Averag, Weightade Moving Average, Exponential Smoothing, Linear Equation technique.
Here as well, we have used the forecast demand to exactly plan the order of raw materials.
You can yourself try this Near Beer Game at this below mentioned site: https://forio.com/simulate/mbean/near-beer-game/run/#p=page0
THE NEAR BEER GAME EXERCISE At the beginning of the game customers are ordering ten cases...
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