Yuko Ueki OPIM 5110

April 18, 2013 Individual Supply Chain Ai!n"en#

Using either data from the exercise in class or from the file in the class share folder,
answer the following questions:
1. How did the game illustrate to bullwhip effect? Use data to illustrate.
$he roo# %eer !a"e i a in!le&produ'#, "ul#i&#a!e upply 'hain i"ula#ion (or (our
player )here inven#ory de'iion are "ade independen#ly a# ea'h e'helon* $he 35&)eek
i"ula#ion de"on#ra#e ho) in(or"a#ion %e'o"e di#or#ed "ovin! up#rea" (ro"
re#ailer #o (a'#ory, )hi'h 'rea#e #he +ull)hip ,((e'# -+.,/0 #he a"pli(i'a#ion o( order
varia%ili#y* +ull)hip o''ur )hen (ir" pur'hae (ro" upplier "ore varia%ly #han i#
ell #o i# 'u#o"er* S"all varia#ion in 'u#o"er de"and 'rea#e in'reain!ly lar!er
varia#ion a# opera#ion (ur#her re"oved (ro" #he (inal 'u#o"er* 1rea#er varia%ili#y in
#o'kin! level alo reul# leadin! #o "i"a#'he in de"and and produ'#ion, )hi'h
e'ala#e #o#al 'o# and redu'e overall pro(i#a%ili#y o( #he ne#)ork* 2e(er #o 'har#
%elo) (or illu#ra#ed e3plana#ion*
Chart 10
$hi 'har# illu#ra#e ho) varia%ili#y in de"and
a"pli(ie #hrou!h #he upply 'hain* +ull)hip
e((e'# )a 'al'ula#ed %y0 1) avera!in! varian'e
o( order pla'e"en# a# ea'h #a!e in #he upply
'hain a'ro 'hain 1&45 ) 'al'ula#in! #he ra#io
o( avera!e varian'e a# ea'h #a!e #o varian'e o(
'u#o"er order -or 'u#o"er de"and/* +.,
6 , where i varian'e o( order pla'ed %y k#h #a!e
o( upply 'hain and i 'u#o"er de"and o( roo# %eer
$he ra#io in'reaed 3057, 8937, 18887
repe'#ively, %e#)een re#ailer&)holealer,
re#ailer&di#ri%u#or, re#ailer&(a'#ory*
!able 1: "tatistics "ummar# $ %rders &laced
Customer Retailer Wholesaler Distributor Factory
N
35 35 35 35 35
M 7 7 7 7 7
# observations
7 chains, 35 weeks
245 245 245 245 245

94,892 101,869 130,804 158,383 172,672

24,337 76,393 157,624 224,999 345,862

592,274,944 8,042,686,194 32,541,777,431 63,769,319,525 142,217,020,002
Buwhi! "##ect
o# or$ers
% &
'' 3(58 54(94 107(67 240(12
!able : "tatistics "ummar# ' (n)entor#
Customer Retailer Wholesaler Distributor Factory
N
35 35 35 35 35
M 7 7 7 7 7
# observations
7 chains, 35 weeks
'' 245 245 245 245

'' 43,053 63,722 138,761 182,607

'' 366,958 750,560 859,975 533,657

'' 219,565,190,675 760,814,241,129 886,473,574,700 352,186,757,515
)*!itu$e o#
inventor+ %*a,'*in&
'' 874,155 2,052,276 2,079,171 1,447,866
'' 371 1285 1497 595
Yuko Ueki OPIM 5110

April 18, 2013 Individual Supply Chain Ai!n"en#
Chart 0
S#andard devia#ion -#dev/ )a 'al'ula#ed a# ea'h
upply 'hain level and avera!ed a'ro 'hain 1
#o 4* $he 'har# ho) #ha# #dev o( order
in'reae i!ni(i'an#ly (ro" re#ailer #o (a'#ory,
)hile #dev o( 'u#o"er de"and re"ain #a%le a#
2:,338*4* S#dev o( re#ailer, )holealer,
di#ri%u#or, (a'#ory orderin! i 3;, 4;, 10;, 18;
or 2147, 5887, 9087, 1:857, repe'#ively, #he
#dev o( 'u#o"er order*
Chart *:
$hi !raph ho) avera!e inven#ory uni# -in'ludin!
%a'klo!/ per )eek (or 35 )eek, (or ea'h e'helon in #he
upply 'hain* <a#a )a ued (ro" 'hain 1&4* 2e#ailer
%a'klo! doe no# dip %elo) &:00,000 and inven#ory
'arried doe no# urpa 500,000* +o#h )holealer and
di#ri%u#or ho)ed )ide (lu'#ua#ion in inven#ory
-a"pli#ude = 2 "illion/* >a'#ory alo ho)ed !rea#er
)in! in inven#ory level, %u# le #han )holealer and
di#ri%u#or* Co"pared #o re#ailer, a"pli#ude o( inven#ory
in'reaed 1357, 1387, 887, repe'#ively, (or
)holealer, di#ri%u#or, (a'#ory*
Chart +:
$hi 'har# illu#ra#e ho) avera!e
)eekly a''u"ula#ed upply 'hain
'o# (or 'hain 1&8 e'ala#ed
%e#)een )eek 1 and 35, redu'in!
#he ne#)ork? pro(i#a%ili#y*
A''u"ula#ed 'o# peaked a# over
@2*5 "illion ri!h# a(#er avera!e
%a'klo! 'o# peaked* +a'klo! 'o#
de'lined a #o#al 'o# re"ained
a%ove @1*5"* Inven#ory 'o# roe
harply a(#er )eek 18 due #o #he
upply -ordered in e3'e/ arrivin!
(ro" #he order pla'ed )eek earlier
and peak #o #he rah de'iion&
"akin! a(#er e3perien'in! a
%a'klo!*
Avera!e )eekly a''u"ula#ed upply 'hain 'o# in'reaed %y a%ou# 9007 a# #he peak in )eek 20 'o"pared #o )eek 1*
<ippin! li!h#ly %y )eek 35, 'o# )ere a%ou# 8807 hi!her 'o"pared #o )eek 1 'o#* $he 'aue o( #he !ro)#h in 'o# 'an %e
a##ri%u#ed #o (lu'#ua#in! inven#ory level, (ir# %a'klo! and #hen e3'eive inven#ory 'arryin!, a a reul# o( #he %ull)hip in
Yuko Ueki OPIM 5110

April 18, 2013 Individual Supply Chain Ai!n"en#
order varia%ili#y*
,xhibit 1:
Chain 2 po#ed #he hi!he# #o#al upply 'hain 'o# due #o i# hi!h 'o# in %o#h %a'klo! and inven#ory* Chain 8
pulled o(( #he lo)e# upply 'hain 'o# %y "ain#ainin! avera!e %a'klo! and inven#ory 'o# %elo) @300k*
. -hich of the demand management techniques co)ered in the lecture slides
would #ou choose to impro)e #our suppl# chain? -here possible, use data to
illustrate how this technique would ha)e affected the game.
Aa'k o( in(or"a#ion harin!, lead #i"e, %a#'h orderin!, and hor#a!e !a"in!
'on#ri%u#ed #o #he %ull)hip e((e'# in our roo# %eer upply 'hain i"ula#ion* <e"and
"ana!e"en# B no#a%ly 'o""uni'a#in! de"and and in(luen'in! de"and B )ould have
i"proved our upply 'hain* Alo, proa'#ive 'olla%ora#ive (ore'a#in! and replenih"en#
i 'ru'ial* $he da#a reveal a 'lear #rend0 keepin! %o#h inven#ory and %a'klo! 'o# lo) i
'ri#i'al (or "ini"iCin! #o#al 'o# (or #he upply 'hain ne#)ork* A'hievin! 'o# avin!
)i#hou# a'ri(i'in! 'u#o"er ervi'e i i"por#an#, ho)ever*
Yuko Ueki OPIM 5110

April 18, 2013 Individual Supply Chain Ai!n"en#
One #e'hniDue #o i"prove #he upply 'hain %y "ini"iCin! #he %ull)hip e((e'# i
de"and "ana!e"en# and in(or"a#ion harin!* Uin! an e3ponen#ial "oo#hin!
para"e#er, E or F 6 1& E, )e 'an ho) ho) re#ailer hare de"and in(or"a#ion dire'#ly
)i#h i# upplier, #he )holealer and di#ri%u#or* $hi 'on'ep# lie a# #he 'ore o( vendor
"ana!ed inven#ory -GMI/*
.hen re#ailer hare de"and in(or"a#ion dire'#ly )i#h upplier, #he lead&#i"e,
"oo#hin! 'oe((i'ien# -E, or e3ponen#ial (ore'a#in!/ and de"and 'orrela#ion -H/
'oe((i'ien# o( ea'h #a!e )ill #ill 'aue in(or"a#ion di#or#ion, %u# i# )ill %e "ini"iCed*
In(or"a#ion Bharin! in a upply 'hain )i#h 3&)eek lead #i"e i e3pe'#ed #o de'reae #he
'urren# %ull)hip %y 547*
1
!able *: .inimi/ation of 0-, through information sharing
2e#ailer .holealer <i#ri%u#or >a'#ory
+., )i#hou#
in(or"a#ion harin!
3*58 5:*9: 104*84 2:0*12
+., )i#h
in(or"a#ion harin!
3*58 23*82 :8*3 103*25
GMI %uild on #he pra'#i'e o( 'olla%ora#ive plannin! (ore'a#in! and
replenih"en#* Supplier and re#ailer !oal are ali!ned* $he po#en#ial dra)%a'k i #ha# #hi
#a'#i' lean #o)ard a "ore 'en#raliCed 'o""and&and&'on#rol #ru'#ure*
>inally, an in#ere#in! "en#ion, #here "ay %e a #rade&o(( %e#)een %ull)hip
avoidan'e and 'u#o"er ervi'e* $he op#i"al "oo#hin!, F, o''ur a# #he !olden ra#io
0*818 )here %ull)hip plu ne# inven#ory a"pli(i'a#ion eDual 3*818*
2
*. !hin1ing of #our experience in the game, what effect do #ou thin1
communication has on suppl# chains?
Co""uni'a#ion ha a i!ni(i'an# i"pa'# on #he upply 'hain, in #er" o( i# e((e'# on
#he a"oun# o( inven#ory in a upply 'hain* $he a'#or in our i"ula#ion )ere no# allo)ed
#o 'o""uni'a#e )i#h ea'h o#her* $he )holealer, di#ri%u#or, and (a'#ory only had a''e
#o da#a (ro" #he a'#or dire'#ly %elo) #he"* ,a'h #a!e (or" #heir o)n de"and (ore'a#
independen#ly %aed on in'reain!ly di#or#ed da#a* A a 'oneDuen'e, #hi 'rea#e )ide
)in! in inven#ory, e3'e inven#ory, and )a#e* Io)ever, #he a''ura'y o( #he
in(or"a#ion 'o""uni'a#ed i 'ri#i'al* Joie in #he ne#)ork due #o (lu'#ua#in!
e3pe'#a#ion, (ore'a# error and un'er#ain (a'#or 'rea#e in(or"a#ion di#or#ion, )hi'h
(ur#her e3a!!era#e #he %ull)hip e((e'#* .hile y#e"&)ide in(or"a#ion harin! 'anno#
eli"ina#e #he %ull)hip e((e'#, i# 'an 'er#ainly redu'e i#*
1
Uin! #he (or"ula (ro" K* Kia, L* $akahahi, and K* .an!* MA #udy on #he i"pa'# o( un'er#ain (a'#or on
in(or"a#ion di#or#ion in upply 'hainN Production Planning & Control: The Management of Operations*
-Kan 2005/, pp 2& 11*
2
S*M* <iney, I* >arayn, M*2* Aa"%re'h#, <*2* $o)ill, and .*Gan de Gelde* Dampening Variability by
sing !moothing "eplenishment "ules* 2e#rieved (ro"
h##p0OOliria*kuleuven*%eO%i##rea"O123:58489O122828O1O0502*pd(
Yuko Ueki OPIM 5110

April 18, 2013 Individual Supply Chain Ai!n"en#
+. -hat barriers pre)ent communication across suppl# chains? -h# do #ou thin1
efforts to communicate sometimes fail?
,#a%lihin! #ru# i a %arrier #o 'o""uni'a#ion* A la'k o( #ru# "ay per"ea#e
ne#)ork )here par#ner have no# (ully e#a%lihed rela#ionhip, i"pedin!
'o""uni'a#ion* Co""uni'a#ion %arrier are alo an inheren# par# o( de'en#raliCed
y#e" )here independen# par#i'ipan# alon! #he upply 'hain "ay have 'o"pe#in!
in#ere#* In addi#ion #o diver!en# !oal, a la'k o( #ranparen'y, #a#u Duo, and #radi#ional
hierar'hy are alo %arrier #o 'o""uni'a#ion*
In #oday? in'reain!ly %orderle )orld, 'o""uni'a#ion i "ore i"por#an# #han ever*
Io)ever, )i#h !lo%aliCed upply 'hain 'onne'#in! "ore divere (ir" #han ever, i# alo
"ean #ha# lan!ua!e and 'ul#ural di((eren'e are #hro)n in#o an e3pandin! "i3 o(
'o""uni'a#ion %arrier*
An e((i'ien# and e((e'#ive upply 'hain depend on a 'o""uni'a#ion y#e" #ha#
(o#er #ru#, repe'# and 'olle'#ive e((or#* $he #ru'#ure o( #he upply 'hain hould aid in
developin! rela#ionhip #ha# en'oura!e 'o""uni'a#ion %e#)een par#i'ipan#* In #hi
ene, environ"en# "ay play a key role in 'o""uni'a#ion*
Jo# kno)in! one? audien'e i one 'ulpri# o( our (ailed e((or# #o 'o""uni'a#e* All
#hee varia%le B #ryin! #o under#and )ha# #he o#her )an#, )ha# #hey kno), ho) #hey
#hink, and #heir a##i#ude #o)ard you B a((e'# ho) you 'an (ra"e your "ea!e, i( one i
even 'apa%le o( doin! o* In a 'o"pe#i#ive )orld, "any a'#or are un#ru#in! and #hi alo
preven# in(or"a#ion harin! and 'o""uni'a#ion* ,ven (ear o( li#i!a#ion "ay ha"per
e((or# #o 'o""uni'a#e* >inally, 'o!ni#ive %iae 'an preven# 'o""uni'a#ion, in #er" o(
%o#h ho) )e 'onvey and a''ep# in(or"a#ion*