This is one of the conclusions of playing "The Beer Game"[1] which aims to have players simulate a supply chain. To begin with players try to decrease local in

This is one of the conclusions of playing "The Beer Game"[1] which aims to have players simulate a supply chain. To begin with players try to decrease local inventory to get a better score. i.e. lower costs by holding less. Then when a shock to the system is introduced, and orders spike, the players struggle to meet demand and the system becomes chaotic. This seems to happen even when players have played the game before. The lesson seems to be that you can't easily do JIT without very good lines of communication or buffer inventory which is expensive. As I remember it the cute, old metaphor I was taught was that inventory was like water in a river. We aim to lower the water until you just expose the rocks but no more. Then you remove the rocks one by one. If you deplete your inventory too soon you're exposing too many rocks and you'll ground your boat. 1. http://web.mit.edu/jsterman/www/SDG/beergame.html http://web.mit.edu/jsterman/www/SDG/beergame.html