Scribd
Upload
297 views10 pages

Global Supply Chain Simulation Game

The document discusses the results from 4 years of a global supply chain simulation game. Key points: 1) In Year 1, the strategy was to consider the consensus forecast and focus on profit margins and inventory costs. 2) In Year 2, standard deviations were considered when making decisions and a more conservative approach was taken. 3) In Year 3, the same strategy as Year 2 was followed but a riskier demand approach was taken based on prior experience. 4) In Year 4, a more conservative approach was reverted to in order to regain profits, by choosing options that decreased demand standard deviation.

Uploaded by

SUDHIR KAUSHIK
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
297 views10 pages

Global Supply Chain Simulation Game

The document discusses the results from 4 years of a global supply chain simulation game. Key points: 1) In Year 1, the strategy was to consider the consensus forecast and focus on profit margins and inventory costs. 2) In Year 2, standard deviations were considered when making decisions and a more conservative approach was taken. 3) In Year 3, the same strategy as Year 2 was followed but a riskier demand approach was taken based on prior experience. 4) In Year 4, a more conservative approach was reverted to in order to regain profits, by choosing options that decreased demand standard deviation.

Uploaded by

SUDHIR KAUSHIK
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 10

Global Supply Chain

Simulation Game
Increase profit

Cost of production

Feature Minimize costs Cost of inventory


Cost of change orders

Choice
Rationale Least standard
deviation
Goal to meet demand
with higher accuracy

Features that had no impact on profit


were not chosen
Changed throughout the game
Demand
Estimate
Considered consensus forecast as a baseline
Rationale

Average demand (and standard deviation) provided


based on feature choice compared and used as upper
and lower limits
Results from previous cycles influenced our final
decisions for the following cycles
Prioritized least-cost options
Supplier Set-up cost

Selection Cost/unit

Rationale
Higher production levels used FarFarAway for the
least cost

Buffer in production capability employed by using a 0


lead time supplier
Flexibility allowed for change orders at any time
Year 1 Results

Original strategy:
• Consider consensus forecast
provided by forecasting team vs.
the average forecast based on
model design
• Focus on profit margin and
minimizing inventory holding cost
Model Consensus Average Std. Dev
(with options)
A 63 58 4
B 33 28 5
Year 2 Results

Year 2 Strategy:
• Took standard deviations
into account when making
decisions
• Conservative approach

Model Consensus Average Std. Dev


(with options)
A 60 55 2
B 30 32 4
Year 3 Results

Year 3 Strategy
• Follow same strategy as Year 2
• Took riskier approach with demand
strategy based on last year’s
experience

Model Consensus Average Std. Dev


(with options)
A 66 65 2
B 32 29 5
Year 4 Results

Year 4 Strategy
• Reverted to more conservative
approach in order to regain profit
levels
• We chose options that decreased
standard deviation of demand

Model Consensus Average Std. Dev


(with options)
A 60 63 1
B 28 26 9
Overall Performance
Takeaways
• Even the “experts” in forecasting can make mistakes
• It is important to be prepared to make educated changes at any point in the production process in order to
minimize costs and maximize profits
• Built-in capabilities to meet fluctuations in demand are essential
• Choosing the right suppliers who have flexible timelines is important
• Design optimization was a key component of our success
• Combination of features changed profit and demand projections, as well as the standard deviation of the
demand, which allowed us to make smarter decisions
• Standard deviations are an important factor in making decisions
• They made us more aware of the potential bumps along the way

You might also like