Demonstrating supply chain parameter optimization through beer game simulation

• Authors: Sameer Kumar;Charu Chandra;Marvin S. Seppanen
• Venue: Information-Knowledge-Systems Management
• Year: 2007

The single player Beer Game supply chain simulation developed using Arena, Visio, Excel, VBA, OptQuest, and Crystal Reports software tools provides a virtual laboratory to analyze various scenarios for optimal design. The model uses animation, directed arrows to show flow of information and flow of material - work in process or finished goods at different stages of transformation, and icons to show an entity such as plant/factory, consumer, warehouse, etc. The model can be scaled up to a larger network of suppliers, OEMs, etc. with multiple products and other features that replicate complexities in an industry supply chain. The detailed analytical presentation of the Beer Game simulation example provides a useful framework for learning about challenges in production logistics systems. The contribution of this paper is to complement and enhance the existing body of knowledge where Beer Game or a similar approach has been utilized in understanding the complexity of managing decision-making in supply chain. In addition, the concept of templates (that is, Excel Workbooks) introduced can be used to build a generic framework for supply chain design of any business operation. The distinguishing feature of this paper is the emphasis given to the integrated system development environment utilizing a simulation software to study, understand, and learn about supply chain management problems. The Bullwhip Effect is an important demand and supply coordination problem that affects numerous organizations (for example, in spite of the efficient Cisco e-hub, still the Bullwhip effect is limiting their performance) which is a major phenomenon incorporated in the Beer Game model.