The Beer Game :: GCSE Business Marketing Coursework

The Beer GameTo see how decisions at one part of a add on chain effect the overall performance of a system, we ran a pretension called the beer game. The supply chain consists of a retail merchant who battle arrays from a distributor who orders from a wholesaler who orders from a manufacturing plant. At the beginning of each(prenominal) period, each confront of the chain orders upstream and receives the order shipped out to them two periods ago (the order they placed 4 periods ago) unless the next stage upstream is backlogged. All orders ar eventually filled when inventory be flummoxs available. The holding cost specified for each location are (in $/keg.period) factory 0.25, distribution center 0.50, warehouse 0.75, and factory 1.00. Additionally, the penalty cost for a shortage is zero for all stages boot out the retail computer storages where the penalty cost is estimated to be $10.00 per keg/period.After exhausting many different strategies, the best constitution I was able to come up with had a total cost of $122.00. This was achieved using choice 4, the base-stock policy. This policy re-orders a specified amount, less inventory on hand and assembly line inventory. The player specifies the base stock quantity for the retailer, warehouse, distributor, and factory. When this policy was used at each point in the supply chain, the lowest cost scheme was achieved. Location Base Stock AmountCostRetail ccc 101.55Warehouse 210 10.21Distributor 210 7.70Factory 150 3.41Total 122.87Because the retail store encounters such a high penalty for shortages, it is best to keep them puff up stocked. They also have the highest holding overagecost, but at $1.00 it is merely 1/10 of the shortage underagecost. If the overage and underage cost were equal it would make sense to always order enough to ask having the mean (50) on hand. This policy is not optimal how ever, when it costs the retailer more for a shortage than for excess.