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Analysis of Beer Game

Group 5
Outline
1. Bullwhip Effect
2. Process Efficiency
3. Lean Process Analysis
– Muri (Overburden)
– Mura (Unevenness)
– Muda (7 Wastes)
4. Conclusion
2. Bullwhip Effects

Bullwhip Effect of Orders


Incoming Order Your order
25 25

20 20

15 15

10 10

5 5

0 0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48

Week Week
Wholesaler Retailer Distributor Factory Wholesaler Retailer Distributor Factory

Member Variance of Orders (σ2p) Variance of Demand (σ2r ) BEO player = (σ2p) / (σ2r )

Retailer 23.798 1.325 17.957

Wholesaler 25.473 22.598 1.127

Distributer 36.391 22.525 1.616

Factory 56.651 35.225 1.608

BEO Supply Chain = 52.592


2. Bullwhip Effects

Bullwhip Effect of Inventory


Incoming Order Inventory
45
25 40
35
20
30
15 25
20
10 15
10
5
5
0 0 45, 0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48

Week Week
Wholesaler Retailer Distributor Factory Factory Wholesaler Retailer Distributor

Member Variance of Net Stock (σ2p) Variance of Demand (σ2r ) BEI player = (σ2p) / (σ2r )

Retailer 29.704 1.325 22.414

Wholesaler 92.619 22.598 4.099

Distributer 180.434 22.525 8.01

Factory 222.749 35.225 6.324

BEI Supply Chain = 4653.293


2. Bullwhip Effects

Fill Rate
• The poor performance of retailer can be reflected by average fill rate of only 0.497
represents less than half of the orders delivered to customer on-time.

1.2

0.8
Fill Rate

0.6

0.4

0.2

0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46

WEEK

Fill Rate Average Fill Rate


3. Process Efficiency

Theoretical Lead Time


3. Process Efficiency

Actual Lead Time


Average Actual Lead Time = Total Ordered / Total Delivery (week)

Whole- Distribu Produc


Retailer Factory -tion
saler -tor

Demand through lead time


= Average Delivery to the downstream member (LHS) x Lead Time
3. Process Efficiency

Takt Time
Takt Time = 1 week/ Average Demand from Downstream (week/case)

I want #
Ideal Lead Time = 1 week
of beer!

1 week 1 week 1 week 1 week


custom Whole- Distribu
er
Retailer Factory
saler -tor

Gap: No sufficient inventory in the


supply chain!

Average Actual
Lead Time
✖ ✖✖ ✖ ✔
LEAN PROCESS
4. Lean Process

Muri (Overburden)
Contributing factors:
Slow response time

Irregular demand patterns

Rank Member

1 Wholesaler

2 Distributor

3 Retailer

4 Factory
4. Lean Process

Mura (unevenness)
 Factory is ranked as most inconsistent  highest variance in order
& demand.

 Demand is unpredictable  unable to smooth out any


irregularities  backlogs for delivery

Rank Member

1 Factory

2 Wholesaler

3 Distributor

4 Retailer
4. Lean Process

Muda (7 Wastes)
 All are waiting for information.

1 Waiting  Due to irregular demand patterns, all upstream are waiting for delivery from their

downstream.

2 Over Production  In anticipation of large orders, all decided to order more that cause over production.

3 Rework/Defects  NIL

4 Motion  NIL

5 Over Processing  The forecast by each member is inaccurate due to imperfect market information.

 Due to over production in anticipation of large customer demand, the inventory may be

6 Inventory stored at the warehouse that takes up space, costs money as well as may get damaged with

time if not managed properly.

 As each of the components on the supply chain may not cluster together, there are time
7 Transport
wasted between transportation from end to end.
5. Conclusion

Conclusion
• Inefficient and performed poorly to satisfy
customer’s demand.
• The wholesaler is the bottleneck of the supply
chain
• The retailer also contribute significantly
• Way to go : Toyota Production System
• sharing information, accurate forecasting and
standardization in production
Thank You!

Any questions?