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Antoine'Tzavaras'' ' ' ' ' ' ' ''''Monday'18'March'
2019'
Section'5''
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Supply'Chain'Simulation'&'Case'Studies'
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Report:!!
• The!bullwhip!effect!you!experienced!in!the!two!rounds!!
• The!differences!between!the!traditional!supply!chain!(round1)!and!the!
collaborative!supply!chain!(round2)?!!
• The!impact!of!information!sharing!on!both!individual!and!group!performance?!!
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First!of!all,!let’s!expose!my!understanding!of!the!bullwhip!effect.!The!bullwhip!effect!
begins!when!there!is!an!increase!in!demand!for!a!product!coming!from!the!consumers.!
Then!the!retailer!makes!an!order!to!its!supplier,!which!is!actually!more!important!than!
the!real!demand!of!the!consumers,!in!order!to!have!a!safety!stock,!or!to!benefit!from!
discounts!on!the!volume!of!purchase.!!
As!we!move!up!in!the!supply!chain,!the!demand!continues!to!increase!because!at!each!
level!of!the!chain!additional!units!of!safety!stocks!will!be!added.!Moreover,!the!demand!
will!also!increase!because!of!the!larger!order!volumes!to!be!able!to!benefit!from!better!
prices.!!
In!order!to!save!transports!costs!suppliers!will!wait!and!delays!will!occur.!This!
phenomenon!will!create!the!tendency!to!request!more!security!stock!and!backorders!
will!occur.!The!manufacturer!will!perceive!a!huge!increase!in!demand!artificially!
amplified!and!which!could!lead!to!increase!production!in!response!to!a!much!larger!
demand!than!the!demand!real.!
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At!the!first!round!my!role!was!retailer!and!I!was!directly!linked!to!the!demand!of!the!end!
consumer.!I!have!tried!to!prepare!a!safety!stock!in!case!of!a!strong!increase!in!demand!
for!both!beers.!Since!the!beginning!the!distributor!and!the!wholesaler!have!had!some!
problems!to!satisfy!my!orders.!Indeed,!I!had!ordered!too!much!at!the!beginning:!It!is!
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much!more!interesting!to!order!3!times!3000!units!rather!than!9000!units!because!of!
the!delays!of!delivery.!Without!communicating!with!the!other!actors!of!the!supply!chain!
it!was!very!difficult!to!manage!my!inventory!and!had!backorders!all!the!time.!!
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During!round!2,!my!role!was!wholesaler.!As!I!had!already!performed!as!a!retailer!I!could!
definitely!better!understand!how!to!manage!the!distribution!of!the!wholesaler.!
Moreover,!we!had!access!to!the!demand!of!the!end!users.!Unfortunately!this!last!factor!
was!one!who!tricked!our!team.!Indeed,!the!retailers!had!wrongly!forecasted!the!demand!
for!the!Igloo!beer.!This!is!why!we!produced!and!distributed!a!huge!amount!of!Igloo,!
which!was!much!higher!than!the!actual!demand.!This!phenomenon!has!had!huge!
consequences!in!the!inventory!costs!at!each!stage!of!the!supply!chain.!However,!thanks!
to!communication!and!a!good!forecast!of!demand!for!the!Calore!beer!we!had!very!few!
backorders.!!
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Communication!between!the!different!actors!of!the!supply!chain!has!had!tremendous!
consequences!on!our!project.!Indeed,!thanks!to!communication!we!could!order!in!way!
that!satisfied!each!of!our!suppliers.!On!the!other!hand,!we!could!better!manage!our!
transport!costs!by!sending!full!trucks!rather!than!half!filled!trucks.!Unfortunately!we!had!
this!little!misunderstanding!with!the!retailer!regarding!the!demand!of!igloo,!we!could!
have!managed!a!positive!end!result.!!
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