Wholesaler

By the relatively small demand fluctuation at the retailer level in comparison to the
fluctuation at wholesaler. When demand increased, we placed orders accordingly
until a point was reached where every level of the supply chain had too much stock;
by this time, demand had started declining. As the game came to an end, everyone
along the supply chain were no longer buying inventory and had high inventory
carrying costs and were no longer ordering more inventory but rather trying to get rid
of it. From the perspective of the wholesaler, it was especially surprising how much
demand differed between me and the retailer. Backorder means a distribution term
that refers to the status of items on a purchase order in the event that some or the
entire inventory required to fulfill the order is insufficient to satisfy demand leading to
a waiting period for the organization to meet this demand.

The wholesaler started with an inventory of 12 units which remained the same. Due to
an increase in demand from the retailer and a lack of shipments from the distributor,
the inventories fell to 17 units, the wholesaler was having back orders. Backorders
keep reoccurring and fluctuating when it rose to 45 units of inventory and reached a
peak of 106 units in. The orders of the wholesaler, distributor and factory remained
zero because they had high inventories. The decrease in inventories of the retailer
resulted in the increase in order rates which was caused by a decrease in shipment
which is a bullwhip effect. All the supply chain operators had increased their order
rate because their inventory levels were down. And back orders followed alongside
changes in order changes which are all caused by the bullwhip effect. The biggest
challenge we faced during the beer game was the challenge of constantly increasing
backorders to 167.

Wholesaler and Bullwhip Effect

The bullwhip effect is a phenomenon in the supply chain whereby unpredictable

elements introduced by human behavior in the lower part of the chain becomes more
pronounced the higher up the chain they move. By synchronizing the supply chain the
bullwhip effect can be eliminated. The bullwhip effect describes how inaccurate
information, and a disconnection between production and real-time supply chain
information result in loss of revenue bad customer service, high inventory levels and
unrealized profits. The retailer then made an order of 45 units upstream in, when the
wholesaler got the figures the wholesaler then made an order of 50 units. This
continued with the distributor, who ordered 55 units upstream the reaction of the
factory was similar with an order of 55 units. This shows a spike in demand upstream.
The major cause of the bullwhip effect was the increase in consumer demand which
later came to a normal state. The individual demand forecasts from the supply chain
operators also caused the bullwhip effect.

Conclusion
The wholesalers adopt a low-risk cautious strategy that avoids build-up of backlogs
and dealing with new customers. This reduces the cost of inventories as well as the
total expenditures. The main aim of wholesalers is to keep the minimum unsold stock
levels .The retailer is the bottom most player in contact with the customers. The
strategy is risk cautious, and first aim is to have a stock that serves the demand
without the build-up of backlogs. The wholesaler’s strategy also aims at maintaining
the stock levels to serve any impromptu demand from the retailer and wholesaler.