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>What about COVID caused the shortage? Is it shipping speeds? Change in demand? Less efficiency down the supply chain due to health requirements? Trade changes?

by callmeal 5y ago

>What about COVID caused the shortage? Is it shipping speeds? Change in demand? Less efficiency down the supply chain due to health requirements? Trade changes? Take a look at "the beer game". One of the lessons from that game is that a single change in consumer demand causes a wide variety of supply chain disruptions. This lesson was learnt in the 1950s and unfortunately it looks like they stopped teaching this in mba schools, so we have to learn it the hard way all over again. [0] https://www.shmula.com/the-bullwhip-effect/310/ https://www.shmula.com/the-bullwhip-effect/310/

deleted 5y ago
[deleted]
bavell 5y ago
Insightful link, thanks! I knew this info intuitively but didn't know about the beer game, really interesting! Nice to have a little more theory to back up my understanding.
ineedasername 5y ago
Wow, Factorio is an extremely complicated version of the beer game. It's especially obvious visually for my hacked-together systems when I get to the flying drone stage and the drones exhibit the movement patterns like those on the charts in your link. I hate that game.
- Groxx 5y ago
  yeah, factorio does feel like it models this pretty well doesn't it? especially with drones, because they are more flexible about where they go, so the bullwhip can more easily spread to physically-adjacent supply-chains. if you're not over-supplied, when a new spike in demand starts a whip through your factory, things can go nuts for quite a while. you get power surges. drones that were behaving beautifully before start flying in chaotic patterns due to under/over supply and making a bunch of dumb local decisions about storage boxes. stuff grinds to a halt for no apparent reason, only to discover that some random component has become a bottleneck for practically everything, and then it can quickly shift to something on the opposite side of your factory... in that sense, perhaps the biters help keep your factory more resistant. you have to deal with occasional component-losses and spikes in weapon demands, and if you don't handle them well enough you can get into an awful persistent struggling state.
- Dylan16807 5y ago
  It shouldn't be? Maybe I'm missing something, but shortages in factorio normally just flow through the chain without any amplification. There's no planner deciding to order extra to make up for last time or deciding to cut down excess inventory when there's less demand. Or to put it another way, all the buffers in a factorio factory stay the same size and the demand is always just trying to fill the buffer. This whiplash effect is caused by dynamic buffer sizes.
  - ineedasername 5y ago
    It shouldn't be Yeah, it definitely shouldn't. But that's me, hacking together whatever I could to see that unsatisfying rocket launch and finally get the game out of my head. So I'd build something new and supply it from a steel conveyor that had a supply buffer, under estimating how much it would actually use. Then it would eat too much and cause a shortage, which meant other components somewhere else overflowed through lack of use, and overall progress would slow down until I ramped up steel production some more. That sort of thing. So, ideally, everything would go smooth. And plenty of the time for me it did! But a tiny flaw could also be magnified through the system and suddenly I can't produce yellow research bulbs because I was two steel furnaces short of actual demand needed to for servo arms, and production would have peaks and valleys until the additional supply smoothed things out.
    - samhain 5y ago
      I had those same problems until I started using the Factorio calculator[1]. It took some time for it to be developed, and I only just found out about it earlier this year. So I understand where you are coming from. [1] https://factoriolab.github.io https://factoriolab.github.io
    - Dylan16807 5y ago
      Just causing a shortage isn't a bullwhip though. Mere bottlenecks are a much smaller problem.
      - ineedasername 5y ago
clairity 5y ago
> "...unfortunately it looks like they stopped teaching this in mba schools..." why do you believe this? we worked through that simulation as part of my mba program some years ago, and mba friends at other schools said they did the same. the bullwhip effect is such a core concept to operations management that it's hard to believe it wouldn't continue to be taught, though perhaps with an updated simulation demonstrating its effects.

Just causing a shortage isn't a bullwhip though That depends. Either way, what I'm describing are my own observations in Factorio are those instances where shortages actually do end up causing bullwhips. And shortages are not always easy to correct: A "mere bottleneck" is what we have in the chip shortage. Production capacity is the bottleneck, and correcting it is complicated. That is what I also observed in Factorio: A small increase in demand that exceeds supply creates a bottleneck because production can't keep up. It propagates throughout the system causing other shortages where the components 4 or 5 layers down the chain need the scarce material. And also causes surpluses on multiple levels because components can't be used to make the components that also need the scarce material. Fixing the shortage isn't always easy. If you need a lot of a specific material to build the production capacity to fill the shortage, that may reveal yet another bottleneck in producing another material, and so on. IRL, it's possible something like this could occur with the increased uptick in fab production. ASML might be a bottleneck in providing drastically more equipment for more fabs. Or someone up the supply chain that feeds them resources could be bottlenecked. I guess we'll see how it plays out though.

nostrademons 5y ago

Depends how you play. If you plan out your factory ahead of time with a ratio calculator and only build what you need, then a shortage just causes a corresponding shortage in the output that goes away when the input is fixed. A lot of Factorio newbies play with a "Spot bottleneck. Increase production. Repeat" mindset, though. The bullwhip effect absolutely shows up here, particularly if you're sharing intermediate products on a main bus. You start constructing purple circuits; that means your red circuit production is no longer adequate and you've starved blue science. You make more red circuit factories; now you're not constructing enough green circuits, and your whole factory has ground to a halt, but the red circuit buffer is filling up. You increase green circuit production; now you're starving the rest of your factory of iron and your steel production is lagging, dropping purple science production.

Dylan16807 5y ago
So it's not the factory doing it, it's the player constantly changing things without waiting for it to hit steady state. (And not limiting boxes)
- Aeolun 5y ago
  More like your suppliers can’t keep up with changing (increasing) demand. A bit like the chip factories that caused this whole thread :)
  - Dylan16807 5y ago
    That doesn't whiplash. They all run at normal speed, no bursts in demand getting bigger and bigger, then suddenly becoming negative demand, then jumping back up. It's just some parts can't keep up and everything after goes as fast as it can with the supplies it gets, running pretty steadily. It's what you want to happen when supplies are low, for the most part.