Beer Game Essay Example | Topics and Well Written Essays - 500 words

Beer Game - Essay Example The main probable causes of this phenomenon as seen in the graphs are inefficient policies in supply chain management, forecasting errors in consumer demands, and delays in processing information and orders. For example, if there is lack of communication within the supply chain, or at least between the directly interacting ladders, it causes magnification in discrepancy up to the maximum level as orders move upstream to the factories. Additionally, failure to accurately forecast demand increases causes the supply chain to run out of stock and fail to safeguard inventories. Moreover, delays in processing information and orders cause either product shortages or overabundance of stock. This results in increase in the operational costs of the teams. 2. There are several ways to correct these problems to reduce the costs of this bullwhip effect. One is the use of a supply chain management tool that allows customers to determine the inventory levels of supplying factories. This could resul t in an agreement between the vendors and consumers on the adequate amount of inventory based on buyer demands. This reduces the risk of inaccurate forecasting.