Question

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:

1. Select difficulty level novice mode. Your goal is to return the system to equilibrium so that 15 cases of beer are available in finished goods inventory week after week. You have 50 weeks to accomplish this objective.
2. Select “Start Simulation” and begin playing the game.
3. In the “Raw Materials Orders” box make your selection of how many raw materials you would like to order that week, and click “Submit”. The screen will now update to the next week and will describe the new customer demand.
4. Continue playing until you either put the supply chain back into balance, or you have played for 50 weeks. The week that you are on can be seen in the top right hand corner of the screen.
5. Once the game is completed review the tabs (new customer orders, total customer orders, lost orders, inventory, and shipments) across the top of the screen. Take a screen capture (similar to Figure 1: Near Bear Game Tab Screen Capture Example) of each of these graphs and save them to insert, embed and reference in a text document (e.g. Microsoft Word) with your answers to the questions as stated below. If you feel ambitious, try the simulation again at Expert mode (not required)!

Figure 1: Near Bear Game Tab Screen Capture Example

QUESTIONS:

answer the following questions about your Near Bear gameplay:

Part A

1. How many weeks did it take you to reach equilibrium?
2. Describe what inventory shortages you experienced?
3. Did you ever have more inventory than customer orders? Why or why not?
4. How did you adjust your production/raw orders to meet customer demand?

Part B (20 marks)

1. Describe the bullwhip effect, and explain the impact it had as you were playing the game
2. Embed each of the graph screen captures from your Near Bear game play as stated in Point direction 5 from the Directions section above. Label each graph. Then, describe the trend that you denote in the graphs for new customer orders, total customer orders, lost orders, inventory, and shipments.
3. Describe the importance of demand forecasting and the forecasting techniques used within the supply chain as it pertained to your application in game play. What information/technique did you use or make your forecasting decisions?

Part C

1. Critique your ability to meet equilibrium to meet needs and/or supply chain mandates? What would you do the same or differently? Explain.
2. What solutions would you suggest to each of the characters (raw material supplier, vendors, brewers) in the game? Why?
3. Explain how you made decisions to meet equilibrium. Which pieces of information aided you the most to make these decisions. Why?

Answer 1

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