Reflections of Week 1 Supply Chain Game (Area 51)Supply Chain Game: Round 1Team Area 51 - Mark Barany and Wick Newell
When we started the second week of the supply chain game we were surprised to learn that the two other teams we were competing against came to class with their strategy already mapped out. I am sure Wick and I would have did the same had we actually understood the way in which the order quantity and order shipped parameters changed the game. We experimented throughout the first week with changing parameters, but I think never got the hang of how they worked since we were playing catchup the whole game and shipping every piece of inventory we had.
Since we didn’t have a strategy mapped out, we created one on the fly. One of the very first things Wick and I agreed upon was that we wanted to have at least enough inventory to cover median demand throughout the game. We looked at the plot demand history and found the median of all the countries and then estimated the demand of Enthworpe and came up with a median demand of 135 units spread between the continental countries and a demand of about 20 units for the island country of Fardo. Ramping up production to meet median demand was one of the smartest moves we made in the game.
The second thing we had to look at was where we wanted to build factories and where we wanted to build warehouses. Since we had to make a spur of the moment decision we decided to build a factory and a warehouse on the island of Fardo. We quickly calculated that there was enough demand on Fardo to warrant the decision. It would have been interesting to have enough time to time to actually calculate if the move was worth our time. We decided that since factories are so expensive that we were only going to build one for all the mainland countries. I think this strategy also worked well because the additional costs to ship outside the country were less than the cost of building additional factories.
The last strategy that worked out well for us was that we decided to make sure we had inventory on hand at all costs. This means that even if during low demand times we still had our production at full blast so that we could stock up on inventory for high demand times. This strategy also saved us some headaches because it allowed us to just keep producing and shipping to all our warehouses while we were sleeping. One of our biggest worries was completley running out of inventory in the middle of the night and not being able to make adjustments until the next morning. By just ramping up production overnight and then letting the inventory burn off throughout the day we were able to manage our inventory with greater precision.
In hindsight, there are a few different approaches that I would have changed. One of those things is the quantity we set for our factory to produce. We chose 135 units a day purely because it seemed like that was the median demand. We forgot to factor in that trucks make the most money when they ship 200 units and the truck is full. Next time I would have chosen to produce 133 or 150 units so I could ship in batches of 400 or 600 without waste.
The other big thing I would have done differently is I would have stopped production sooner. I assumed that demand was going to be steady throughout the end of the game. But by the last 14-20 days demand continiously went down until it almost reached zero.
One thing that I learned from playing this game is that it is important to add capacity as soon as possible so that you have more time to watch your investment make a return. But one of the most important things I learned was that it was beneficial to always have inventory on hand because the times we did the worst is when we lost sales due to a lack of supply. One of our main objectives throughout the game was to monitor the plot lost demand table to look at where we couldn't keep up with demand and try to change that so that we could end up having no lost demand.
Tuesday, August 7, 2007
Wednesday, July 11, 2007
Week 3- June 27th
I must admit that I was just downright excited about our week 3 class (which is no small feat for someone who has pretty much been in school for eight out of the last ten years). This was the class where we started an even more complex supply management game. We used the first fifteen minutes of the class to go over rules and to get a better understanding of which variables we could control. We then spent the next 15 minutes looking through the graphs, charts and text within the game to better understand our objective and to evaluate the history of transactions that happened before we joined up with the game.
With the push of a mouse button Professor Hughes started the game and the clock ticked forward. Every real-time 15 minutes equaled one day in the game. To be quite honest my teammate Wick and I felt like we had very little idea of what we were supposed to be doing by the time the game was underway. And as the first few days past and we became accustomed to the game's interface it felt like we had even less of an idea of our strategy or even what variables we could change.
By the time one hour passed (or 4 game days) there still had been very little movement on the board amongst any of the teams. One thing I did learn (from the beer game) is that it is important to start ramping up supply for the long haul early so that we don't have to start the game in a huge hole and try to make up for supply throughout the whole game. By day 5 within the game we made a push to improve our factory production from 20 barrels a day to 40 barrels at the cost of 1 million dollars.
The felt like the move to build an aditional factory producing 20 additional barrels was the best move we could make to start the game and get a leg up on the teams we were competing against: donothing, 3 guys and scam. The only thing I was questioning was should we build even another factory on top of that for a total yield of 60 barrels a day?
After buying an additional factory we instantly dropped to last place in overall capital. At that point all we could do was pack up, go home and watch for 90 (in game) days to unfold and watch the effect it has on our profit.
With the push of a mouse button Professor Hughes started the game and the clock ticked forward. Every real-time 15 minutes equaled one day in the game. To be quite honest my teammate Wick and I felt like we had very little idea of what we were supposed to be doing by the time the game was underway. And as the first few days past and we became accustomed to the game's interface it felt like we had even less of an idea of our strategy or even what variables we could change.
By the time one hour passed (or 4 game days) there still had been very little movement on the board amongst any of the teams. One thing I did learn (from the beer game) is that it is important to start ramping up supply for the long haul early so that we don't have to start the game in a huge hole and try to make up for supply throughout the whole game. By day 5 within the game we made a push to improve our factory production from 20 barrels a day to 40 barrels at the cost of 1 million dollars.
The felt like the move to build an aditional factory producing 20 additional barrels was the best move we could make to start the game and get a leg up on the teams we were competing against: donothing, 3 guys and scam. The only thing I was questioning was should we build even another factory on top of that for a total yield of 60 barrels a day?
After buying an additional factory we instantly dropped to last place in overall capital. At that point all we could do was pack up, go home and watch for 90 (in game) days to unfold and watch the effect it has on our profit.
Week 2- June 20th
During week 2 of our supply chain management class we played the "beer game." The beer game is a classic learning experience for those involved in the supply chain and operation management world. The game is comprised of a factory, distributor, wholesaler and retailer. The object of the game is to keep the supply flowing evenly throughout your given timespan, but without keeping surplus stock by the end of the timespan.
I think most grad students within the class had played the game before and had a pretty good idea of what strategy they would use from the very get go. The only problem is that I think we all didn't learn from our past mistakes and relied to much on the "old" information coming from the other teams. When I think back on how I played this game last time (In Jim Rand's Operations Management class) I remember how throughout the whole game we always struggled to keep up with supply. So the big question is, How come we were unable to see the same predicament happen all over again?
I think one of the obvious answers is that we weren't allowed to talk with one another. Some of us who had been exposed to this game could have clued in other players as to the expected outcome. But I think an even bigger factor is that we actually trusted the relayed information being sent from down the pipeline. We were oblivious of the fact that we were adjusting allocations based on news that was considered to be 2 weeks old and even more oblivious to the fact that the supplies we were sending along wouldn't reach the retailer until 8 weeks after their request.
In hindsight I think the strategy we should have used was to have the factory send out as much stock as they could for the first 8 weeks and push the product as quickly as possible to retailers to make sure that they could keep up with initial demand. Once those first 8 weeks were over then I would start sending quantities out based on the average demand you saw over the first 8 weeks. The thing you absolutely want to avoid is being stuck without product early in the game because most likely you are going to spend the whole game trying to recover from the loss.
I think most grad students within the class had played the game before and had a pretty good idea of what strategy they would use from the very get go. The only problem is that I think we all didn't learn from our past mistakes and relied to much on the "old" information coming from the other teams. When I think back on how I played this game last time (In Jim Rand's Operations Management class) I remember how throughout the whole game we always struggled to keep up with supply. So the big question is, How come we were unable to see the same predicament happen all over again?
I think one of the obvious answers is that we weren't allowed to talk with one another. Some of us who had been exposed to this game could have clued in other players as to the expected outcome. But I think an even bigger factor is that we actually trusted the relayed information being sent from down the pipeline. We were oblivious of the fact that we were adjusting allocations based on news that was considered to be 2 weeks old and even more oblivious to the fact that the supplies we were sending along wouldn't reach the retailer until 8 weeks after their request.
In hindsight I think the strategy we should have used was to have the factory send out as much stock as they could for the first 8 weeks and push the product as quickly as possible to retailers to make sure that they could keep up with initial demand. Once those first 8 weeks were over then I would start sending quantities out based on the average demand you saw over the first 8 weeks. The thing you absolutely want to avoid is being stuck without product early in the game because most likely you are going to spend the whole game trying to recover from the loss.
Friday, June 15, 2007
Week 1-June 13th
The first week of ISM 6910: Global Supply Chain has begun. After only a six day break between Spring Quarter and Summer Quarter classes. The good news is that this is the first time in twenty weeks that I am studying something other than SQL databases.
Since the MS-ISM (Masters of Science in Information Systems Management) program at SPU only requires a few business classes and then delves straight into Information Systems classes its refreshing to take revert back to some business basics.
The first class started with an introduction of who the professor is. We learned about his education and career background. Dr. Hughes was previosuly the CIO of REI (Recreation Equipment Inc.). I was glad to hear about all of his recent endeavors in the business world because it often seems like tenured professors can get into a funk were they just stay within the educational community too long without getting any updated, hands on knowledge about their subject matter. It's one thing to read articles published by peers in your field, but it's a completely different (and better) situation to be an essential piece of an organization and then take time out to teach other's of your recent successes and failures.
We played a supply chain game that tested our organizational skills. Our challenge was to create a product out of 30 index cards and 3 pieces of 8.5"x11" paper and scotch tape. There were 4-6 rules put into place, but the biggest two were that the final product had to fit into a 12"x12"x12" cube and we had to finish everything within 15 minutes. It feels like we had an idea that would meet the guidelines of the project within about a minute and so we quickly just split the supplies evenly and worked on making three wheels. The problem with everyone in production meant that no one was taking care of managing other supply problems. No one on our team actually kept track of time, supplies, quality control or even took the time to create a sketch or prototype of our product.
It will be nice to get a different vantage point of a business other than operations and information systems management viewpoints. Supply chain management is something that I hear a lot about, but have had little experience actually dealing with.
I am going to start reading the first chapters in both Tom Mentzer's, Fundamentals of Supply Chain Management and Rivoli's, The Travels of a T-Shirt in the Global Economy.
Since the MS-ISM (Masters of Science in Information Systems Management) program at SPU only requires a few business classes and then delves straight into Information Systems classes its refreshing to take revert back to some business basics.
The first class started with an introduction of who the professor is. We learned about his education and career background. Dr. Hughes was previosuly the CIO of REI (Recreation Equipment Inc.). I was glad to hear about all of his recent endeavors in the business world because it often seems like tenured professors can get into a funk were they just stay within the educational community too long without getting any updated, hands on knowledge about their subject matter. It's one thing to read articles published by peers in your field, but it's a completely different (and better) situation to be an essential piece of an organization and then take time out to teach other's of your recent successes and failures.
We played a supply chain game that tested our organizational skills. Our challenge was to create a product out of 30 index cards and 3 pieces of 8.5"x11" paper and scotch tape. There were 4-6 rules put into place, but the biggest two were that the final product had to fit into a 12"x12"x12" cube and we had to finish everything within 15 minutes. It feels like we had an idea that would meet the guidelines of the project within about a minute and so we quickly just split the supplies evenly and worked on making three wheels. The problem with everyone in production meant that no one was taking care of managing other supply problems. No one on our team actually kept track of time, supplies, quality control or even took the time to create a sketch or prototype of our product.
It will be nice to get a different vantage point of a business other than operations and information systems management viewpoints. Supply chain management is something that I hear a lot about, but have had little experience actually dealing with.
I am going to start reading the first chapters in both Tom Mentzer's, Fundamentals of Supply Chain Management and Rivoli's, The Travels of a T-Shirt in the Global Economy.
Subscribe to:
Posts (Atom)