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    Beer Game Strategy

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    deviarchanadas
    As a wholesaler using a continuous review optimal quantity model (QROP), the goal is to keep supply chain costs as low as possible by ordering the optimal quantity of beer. This requires balancing high inventory holding costs from excess safety stock with meeting customer demand to avoid backorder costs of $1 per unfulfilled case. Historical demand data can help estimate mean weekly demand to calculate optimal order quantities using the formula Q = √(2RK/H), considering holding costs (H), ordering costs (R), and demand (K). The QROP model aims to efficiently meet service levels with low inventory levels and ordering costs while avoiding stockouts.

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    Beer Game Strategy

    Uploaded by

    deviarchanadas
    76 views1 page
    As a wholesaler using a continuous review optimal quantity model (QROP), the goal is to keep supply chain costs as low as possible by ordering the optimal quantity of beer. This requires balancing high inventory holding costs from excess safety stock with meeting customer demand to avoid backorder costs of $1 per unfulfilled case. Historical demand data can help estimate mean weekly demand to calculate optimal order quantities using the formula Q = √(2RK/H), considering holding costs (H), ordering costs (R), and demand (K). The QROP model aims to efficiently meet service levels with low inventory levels and ordering costs while avoiding stockouts.

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    Wholesaler perspective for playing beer game simulation

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    As a wholesaler using a continuous review optimal quantity model (QROP), the goal is to keep supply chain costs as low as possible by ordering the optimal quantity of beer. This requires balancing high inventory holding costs from excess safety stock with meeting customer demand to avoid backorder costs of $1 per unfulfilled case. Historical demand data can help estimate mean weekly demand to calculate optimal order quantities using the formula Q = √(2RK/H), considering holding costs (H), ordering costs (R), and demand (K). The QROP model aims to efficiently meet service levels with low inventory levels and ordering costs while avoiding stockouts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    76 views1 page

    Beer Game Strategy

    Uploaded by

    deviarchanadas
    As a wholesaler using a continuous review optimal quantity model (QROP), the goal is to keep supply chain costs as low as possible by ordering the optimal quantity of beer. This requires balancing high inventory holding costs from excess safety stock with meeting customer demand to avoid backorder costs of $1 per unfulfilled case. Historical demand data can help estimate mean weekly demand to calculate optimal order quantities using the formula Q = √(2RK/H), considering holding costs (H), ordering costs (R), and demand (K). The QROP model aims to efficiently meet service levels with low inventory levels and ordering costs while avoiding stockouts.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Wholesaler

    As a wholesaler, the model chosen is the Continuous Review Model (QROP) with
    optimal quantity ordered to keep the cost of supply chain as low as possible. It is
    mentioned that the cost of each beer in the system is $0.5, therefore if safety stock is kept
    high, that would lead to high inventory costs.

    The aim of the beer game strategy is to keep the cost of supply chain as low as possible.
    This would lead to a trade off between high inventory cost and meeting the demand of the
    customers. But as cost efficiency holds a higher ground, considerations are required to be
    made. This brings us to the cost of backorder. For any demand that is not met, or for lower
    service level, a cost is to be paid. It is going to cost about -$1 for every demand of beer
    placed by the retailer that is not satisfied as a wholesaler.Therefore, though service level
    is not priority, it is important to maintain the process such that there is a middle ground
    between high risk (no safety stock) and low risk (lowest unsold stock). The approach of
    calculating the target inventory for every weekly order by considering incoming supply and
    outgoing supply should be implemented. If there’s any historical data from the previous
    weekly demand by the customer to the retailer, that data can be used to make an estimate
    of the mean demand. It is to be also considered that the demand can be unequal every
    week and hence a new analysis would be required every week before an order is placed
    with the distributor. We have to take into account the condition in which each chainer in
    the supply chain, utilizes the target inventory model to place order with their immediate
    chainer. In this case, there’s going to eb a bullish whiplash and there could be issues like
    high inventory, shortage of stock, mismatch between supply and demand etc. The need
    to encounter delay times for shipping and processing of each placed order needs to be
    done to make sure that even with a low risk approach, there is a careful mitigation to try
    and meet the service level or the demand of the retailer.

    Q = √(2RK/H), we need to know the holding cost, the ordering cost and the demand to
    calculate the optimal quantity that we need to order to be able to meet the demand of the
    retailer. The holding cost is already known along with the ordering cost but the mean
    demand needs to be known to be able to calculate Q, quantity.

    Cost efficiency is well maintained in a QROP model as the holding cost , i.e., inventory
    costs are low. It brings into account the optimal quantity that needs to be ordered to be
    able to meet a high service level. This also reduces the ordering cost, the safety stock is
    low in this case and there is probability of no stockout during lead time. There could be a
    shortage of inventory, but that needs to be balanced by calculating the ROP to be able to
    realise when to order.

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