Example Of Essay On Beer Game

Beer game is a simulation of a supply chain with four makers, the retailer, wholesaler, distributor and company. This helps the manager at each level of supply chain to decide the amount to order from their suppliers with a common goal of minimizing the cost of capital in the goods, While at the same time avoiding the out of stock situations. The factory aims to produce enough products that will meet the market demands and avoid backorders and use it later to set up the strategy aimed to reduce the stock levels. The distributor's main focus is to have a strategy that will address the problem of backorders and have the stock order that will serve the market without a run out of the stock scenarios.
Beer game is a supply chain model that involves four centers of orders from the final consumer and forwards the order to the wholesaler depending on his policy. The wholesaler sends the order to the factor that decides the amount of the beer to produce. There are a two weeks pre order and information to be effected distribution from the producers, distributor, wholesaler and finally the retailer.
The models from how the different strategies used by supply chain managers to improve the efficiency and cost friendly flow of good from the producers to the final retailers. The two weeks delay is effective in reducing the backorder and the cost of inventories as well as the total expenditure. The strategy for the two weeks delay is important in that it helped each player avoid backlogs. This significantly reduces the costs inventory thus reduced total expenditures.
This strategy effectiveness is recognizable at the retailer’s level where there is no backorder, and the cost of the inventory is significantly less. The two weeks strategy allows the consumers to purchase the available orders and reduce the backlogs. This will reduce the overflow, and the supply managers can supply With respect to the demand. At the retail level, there was constant levels of sale as well as the profits. Huge profit margins were as a result of reduced inventories, maximum sales and a continuous supply. The profits are constant as long as the bars order are streaming in, and this will also have a significant effect on the rest of chain terminals.
The wholesalers, the order were made depending on the demand from the distributors and delivered two weeks later. This supply delay aims to avoid run out of stock scenario from happening at any stage of the chain. The cost of the backorders, the inventories and the total expenditure is higher than in the retailers and the factory. This two weeks delay strategy does not work well for the wholesalers. The inventory cost is very high, and this increases the expenditure than the total sales.
The pass order strategy shows the willingness to take risks in keeping the low levels of stock to reduce the overall expenditure. The two weeks delay strategy is common tom all the players and may impact negatively on their choices and lead ton backlogs. This may occur when unexpected fall in the demand occurs at the consumer level. The simulations how the managers at each level make decisions based on two main policies. These are enough and sustainable stocking, cost reduction, and the higher or lower willingness to take the risks. In this game, the players distal to the market have higher costs. Retailers aside, the factories have higher costs due to the total absorption of market demand by the players.
The factory strategy of taking a risk of aiming the unsold stock levels capable of satisfying the demand of the wholesaler and the distributors. These helps the company avoid the building up of backlog that would ultimately increase the cost of inventory. This ensures that fresh products reach the consumers as fast as possible. The company strategies try to reduce the unsold stock.
The distributor adopts a strategy that is balanced. This aims to keep the stocks high but capable of serving the orders, reduced costs and avoiding the backlogs at the same time. The wholesaler’s strategy also aims at maintaining the stock levels to serve any impromptu demand from the retailer and wholesaler. The costs of the retailers may be higher in than the wholesaler and distributors because of the use of never backorder strategy and the final demand and reduction of goods for the market.
The wholesalers adopt a low-risk cautious strategy that avoids buildup of backlogs and dealing with new customers. This reduces the cost of inventories as well as the total expenditures. The main aim of wholesalers is to keep the minimum unsold stock levels.The retailer is the bottom most player in contact with the customers. The strategy is risk cautious, and first aim is to have a stock that serves the demand without the buildup of backlogs. The retailer’s strategy also tries to have the unsold stock cleared. The retailer also faces the end variations and also responsible at identifying the riskiest wholesaler in order to reduce the stock levels and total costs.
The two weeks delay cleared the backlogs from all levels of the supply chain. The reduction in the inventories reduced the total expenditure from all the players this beneficial. This also served the unknown request and hence avoided the run out of stock scenarios.
The limitation of the games includes the challenge to have a realistic view of then chain management. In has fixed scenarios that the simulation depends on but in the actual case, the scenarios are not fixed in a real chain management. The information exchange can be very can be very slow, and this is a limitation for players in the selection and implementation of the strategies. The game can be improved in the following ways. Students with no prior experience should be involved in the game. Simulation of the supply chain where information is available to each player and avoid slow sharing of information.
The four-step chain increases the total cost of inventory and total expenditure. This can be reduced reducing to three and moving the products from the factory to the distributor and finally to the retailer. This will drastically reduce the inventory and backorders. This will also ensure that the two weeks delay effects are reduced, and the company will be able to monitor the market closely.
In conclusion, the four strategies followed by all the players are the pass order to the next player, full stores to ensure no run out of stock cases and to take care of impromptu demand, low cost and avoiding backorders.