Reflections of Week 2 Supply Chain (Area 51)

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.