Read the summary and the most important questions on SCM operations management

• lesson 1/2

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• Who invented the beer-game, when? Where?

  Jay Forrester 1960 at MIT

• How much stages does the beergame have and what are they?

  4 stages: retailer, wholesaler, distributor and brewery

• What are the reasons for the bullwhip-effect?

  - lack of demand forecasting
  - long lead times (delivery times)
  - batch ordering
  - price fluctuations
  - inflated orders
  
  Overall reasons for the bullwhip-effect: variability & uncertainty

• What is meant by 'lack of demand forecasting' (reason for bullwhip-effect)

  –Missing inventory review policy (stock levels, safety stock)
  –Insufficient forecasting methods
  --> insufficient information from upstream SC participants

• What is meant by 'long lead times' (reason for bullwhip-effect)

  - long lead times --> increasing demand uncertainty during lead time,
  thus increase of safety stock and stock levels to compensate
  --> uncertainty compensation through inventory

• What is meant by 'batch ordering' (reason for bullwhip-effect)?

  –High fixed order costs (order administration, cost for inventory control, inventory policy)
  –Transportation cost: utilization of truckload capacity vs. frequent ordering

• What is meant by 'price fluctuations' (reason for bullwhip-effect)

  –Utilization of price discounts to stock up (promotions, quantity discounts)
  -->  increase in demand variability

• What is meant by 'inflated orders' (reason for bullwhip-effect)?

  –In periods with short supplies – customers tend to order even more and afterwards less --> increasing variability

• What are the consequences of the bullwhip-effect?

  •Excessive inventories among SC
  –Cost: bounded capital, inventory holding cost
  •Increasing planning and co-ordination efforts
  –Organisational efforts to cope with uncertainty from environment
  –Varying procurement quantities
  •Varying utilisation of resources
  –Production facilities
  –Transportation capacities
  –Storage facilities
  –Personnel capacities

• Witch obstacles do you have to cross when you want to start a working Supply chain?

  lack of trust, unbalanced power of supply chain partners…