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The Beer Game: Supply Chain Dynamics
Understand how lag and lack of information sharing cause the bullwhip effect in a supply chain.
Modeling Supply Chain Lag
The Beer Distribution Game was created by a group of professors at MIT Sloan School of Management in the early 1960s to demonstrate a number of key principles of supply chain management.
In this lab, we will explore the bullwhip effect—how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.
The Beer Game Simulator
Interactive Supply Chain Simulation (Placeholder)
Node 1: 10
Node 2: 10
Node 3: 10
Node 4: 10
Why does this happen?
The primary drivers of the bullwhip effect are:
- Lack of transparency: Nodes only see the orders from their immediate downstream neighbor, not the true end-customer demand.
- Lead times: The delay between placing an order and receiving the goods causes panic and over-ordering.
- Batch ordering: Ordering in large batches to save on transport costs distorts the demand signal.
By modeling these systems using reinforcement learning and operations research techniques, we can design control systems that drastically mitigate this effect.