1 the beer game debriefing. 2 the blame game how did you feel? who did you blame?

1

THE BEER GAME DEBRIEFING

2

The Blame Game

How did you feel?

Who did you blame?

3

Summary of Each Team’sOrders, Inventories, & Total Cost

Go to Excel Workbook

4

CHARACTERISTICS OF THE GRAPHS OF WEEK-BY-WEEK

ORDERS AND INVENTORY

Oscillation “Peaks” and “Valleys”

Amplification of Orders Placed As RWDF, there are higher and higher peaks

and lower and lower valleys.

Phase Lag As RWDF, the start of an increase to a peak

or a decrease to a valley occurs later and later.

5

A FINANCIAL NEWS REPORT“On Wall Street today, news of lower interest rates sent the stock market up,

but then the expectation that these rates would be inflationary sent the market down,

until the realization that lower rates might stimulate the sluggish economy pushed the market up,

before it ultimately went down on fears that an overheated economy would lead to a reimposition of higher interest rates.”

From a cartoon by Mankoff (October 12, 1981).

6

MOTOROLA ARTICLE

From Business Week, March 6, 1995.

7

U.S. ECONOMY

8

HOW CAN WEIMPROVE PERFORMACE?

Understand how the game’s structure influences the behavior of the players.

Supply Chain Management

9

“Take two aspirin and wait!”

“If you have a headache and need to take aspirin, you don’t keep taking aspirin every five minutes until your headache goes away. You wait patiently for the aspirin to take effect, because you know that aspirin operates with a delay.”

From The Fifth Discipline, by Peter M. Senge, 1990.

10

Panic!!!(Order Placed) = (Recent Incoming Order)-(Inventory)+(Backlog)

(NOTE: If above quantity is < 0, then reset Order Placed to 0.)

Order Quantity (week-by-week)

0

500

1000

1500

2000

2500

0 5 10 15 20 25 30 35

Week

Ord

er

Qu

anti

ty

Retailer Wholesaler Distributor Factory

INVENTORY (week-by-week)Total Cost = $208,864

(2000)

(1000)

0

1000

2000

3000

4000

5000

6000

0 5 10 15 20 25 30 35

Week

Inve

nto

ry

Retailer Wholesaler Distributor Factory

11

1-for-1 Ordering

(Order Placed) = (Incoming Order)

Order Quantity (week-by-week)

012345678910

0 5 10 15 20 25 30 35

Week

Ord

er Q

uant

ity

Retailer Wholesaler Distributor Factory

INVENTORY (week-by-week)Total Cost = $3232

(32)(28)(24)(20)(16)(12)(8)(4)04812

0 5 10 15 20 25 30 35

Week

Inve

ntor

y

Retailer Wholesaler Distributor Factory

12

A “Scientific” PolicyFor R,W,D: (Order Placed) = 16–(Inventory)+(Backlog)–(Undelivered Orders)

For F: (Order Placed) = 12–(Inventory)+(Backlog)–(Undelivered Orders)

(NOTE: If above quantity is < 0, then reset Order Placed to 0.)

Order Quantity (week-by-week)

0

4

8

12

16

20

24

0 5 10 15 20 25 30 35

Week

Ord

er Q

uant

ity

Retailer Wholesaler Distributor Factory

INVENTORY (week-by-week)Total Cost = $304

(4)

0

48

12

16

20

0 5 10 15 20 25 30 35

Week

Inve

ntor

y

Retailer Wholesaler Distributor Factory

13

Perfect InformationWhat if it were known in advance that the customers’ week-by-week demand would be 4-4-4-4-8-8-8-8-8-…?

Order Quantity (week-by-week)

012345678910

0 5 10 15 20 25 30 35

Week

Orde

r Qua

ntity

Retailer Wholesaler Distributor Factory

INVENTORY (week-by-week)Total Cost = $144

(4)

0

4

8

12

0 5 10 15 20 25 30 35

Week

Inve

ntor

y

Retailer Wholesaler Distributor Factory

14

AND THE WINNER IS …

???