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> It turns out that the actors other than the factory actually have no power over inventory in the system, and since inventory costs the same everywhere, you sh

> It turns out that the actors other than the factory actually have no power over inventory in the system, and since inventory costs the same everywhere, you should be holding 100% of inventory in the retailer and just passing inventory along the supply chain I was expecting this result despite never actually playing this game and only knowing things from the article alone. If this game is what business-managers are playing to learn dynamic systems... then it is almost certainly the source of "just in time" inventory management of today's supply chains, then something like that is natural. So the question is: is the model wrong, or is just-in-time inventory management (for middle groups, like distributors and wholesalers) really the best way to manage inventory?

pclmulqdq 5y ago
I think there are two simplifying assumptions that are problems: 1. The cost to hold inventory is equal at all parts of the supply chain - this is demonstrably not true for most supply chains (in fact, it's usually cheapest to hold supply somewhere in the middle of the chain), but retailers like Amazon and Walmart have figured out how to make this almost true. That allows them to operate with less slack. 2. There are almost no demand dynamics. This seems to usually be a good first-order approximation, but we saw during the pandemic that there were some demand shifts that the system was unprepared for. You can handle dynamics in demand if you build slack into the system (in the case of the beer game, this means controlling inventory to some positive number). I think we were caught in a situation where 1 and 2 were both considered to be true, and we just violently exited that regime. It will be back - we will forget the demand shock and JIT will return since it has the lowest unit costs - but for now we are facing the full brunt of the bullwhip event while we build up stockpiles.
- hef19898 5y ago
  JIT never went away, why would it? It was never applied for parts sourced from overseas anyway. Where exactly inventory is best located depends on the particular supply chain and part, sometimes it's the middle sometimes it's somewhere else. And the bear game is all about demand dynamics, primary demand is almost stable. All it takes to trigger the bullwhip effect is one stock out, and those are intentionally built into it.
whatshisface 5y ago
The beer game was purposely designed to isolate human mistakes as a cause of instability, separated from weather and stuff like that. What weather, technological changes, etc. do is it makes it impossible to design a simple control system.
hef19898 5y ago
The beer game is a quick, easy and fast way to show the behaviour of supply chains, and the dreaded bullwhip effect. It is not meant to simulate whole supply chains or teach inventory strategies. The answer to your question is, no the beer game isn't wrong, and it depends. Because there is no "best" way for anything in supply chain management.

pclmulqdq 5y ago

I think there are two simplifying assumptions that are problems: 1. The cost to hold inventory is equal at all parts of the supply chain - this is demonstrably not true for most supply chains (in fact, it's usually cheapest to hold supply somewhere in the middle of the chain), but retailers like Amazon and Walmart have figured out how to make this almost true. That allows them to operate with less slack. 2. There are almost no demand dynamics. This seems to usually be a good first-order approximation, but we saw during the pandemic that there were some demand shifts that the system was unprepared for. You can handle dynamics in demand if you build slack into the system (in the case of the beer game, this means controlling inventory to some positive number). I think we were caught in a situation where 1 and 2 were both considered to be true, and we just violently exited that regime. It will be back - we will forget the demand shock and JIT will return since it has the lowest unit costs - but for now we are facing the full brunt of the bullwhip event while we build up stockpiles.

hef19898 5y ago
JIT never went away, why would it? It was never applied for parts sourced from overseas anyway. Where exactly inventory is best located depends on the particular supply chain and part, sometimes it's the middle sometimes it's somewhere else. And the bear game is all about demand dynamics, primary demand is almost stable. All it takes to trigger the bullwhip effect is one stock out, and those are intentionally built into it.

whatshisface 5y ago

The beer game was purposely designed to isolate human mistakes as a cause of instability, separated from weather and stuff like that. What weather, technological changes, etc. do is it makes it impossible to design a simple control system.

hef19898 5y ago

The beer game is a quick, easy and fast way to show the behaviour of supply chains, and the dreaded bullwhip effect. It is not meant to simulate whole supply chains or teach inventory strategies. The answer to your question is, no the beer game isn't wrong, and it depends. Because there is no "best" way for anything in supply chain management.