Presented to the IE Department

De La Salle University - Manila

Term 3, A.Y. 2017-2018

In partial fulfillment
of the course
In LBYIEEH

BEER CASE

Submitted by:
Dela Cruz, Juan

Submitted to:
Sir Mariano

August 28, 2018

 BEER CASE

1. What is your position? Describe your feelings as you performed your task during the game.
Did it change during the game? What do you think caused the change/s?
For the beer case, I was assigned the role of the retailer. During the earlier part of the
activity, I was quite lax since my inventory level was adequate and that the units I receive from
the supplier were enough to meet the customer orders. Problems started to arise when the customer
orders began to increase since there was a 4-week delay between ordering the units and receiving
the said units from the supplier. In addition to this, I was refraining from ordering a large amount
since it may cause the supplier to have backlogs. Due to not ordering as much during the early part
of the weeks, I didn’t have enough inventory to meet the demand of the customers thus, I started
to have backlogs when customer orders increased to 10. It was difficult to meet the rapid increase
of customer orders while satisfying backlogs since I couldn’t order a large amount of unit from the
supplier since it causes backlogs on their end.

2. Were your orders constant or variable? Why? How did you make your ordering decisions?
What factors did you consider? Explain how you used these factors. Did you think you were free
or forced by circumstances in your decisions? Explain.
My orders were variable since I made decisions depending on my current inventory level
and the customer orders for the week. In addition, I tried to maintain an inventory level of more
than 10 while the customer orders were 4. Because of this, by the time the customer orders
increased to 10, my inventory level couldn’t meet the customer orders because of the orders I
placed to the suppliers. Eventually, I was forced by circumstances in making ordering decision
since I had to meet customer orders while satisfying backlogs every week. The uncertainty of
customer orders also added to the difficulty of determining the number of orders I place.

3. How were you affected or influenced by your customer? How much did you trust your
customer over time? Was it constant or did you have some suspicions? Your supplier? How and
why were you affected by him/her? Is there a way to avoid being affected by your customer and
supplier? Why or why not?
When the customers were ordering 4 units during the earlier part of the activity, I expected
it to rise constantly but after a few weeks of customers consistently ordering 4 units, my placement
of orders to the suppliers were influenced since it made me lower the amount I order since I wanted
to avoid the supplier having backlogs. Once the customer orders reached 10, the problems began
for me since my inventory level were significantly decreasing and after a few weeks, I had
backlogs. It is possible to avoid being affected by ordering an increasing amount from the supplier,
regardless of the customer orders.
4. What is your total cost? (Add up all the data in the inventory column and multiply by $0.5.
Add up all the data in the backlog column and multiply by $1. Your total cost is the total of the
two sums.) Do you think you were in control of your costs? Was your control the same during
the entire game? If you didn’t feel in control, what causes you to lose control?
My total cost is $250. During the earlier part of the activity, I felt as if I was in control but
as the customer orders increased, my control of the costs decreased due to lack of prediction. I
didn’t expect that the customer orders would increase that much in a short span of time and that,
basically, was the beginning of the end for my control in terms of my costs.

5. Do you think you did well in the game? How so? What caused or affected your performance?
Why did your strategy succeed or fail? Do you think you could have done better? How could you
have done better? If you played the game again would you change your strategy? Why and in
what way? How will your new strategy affect your performance?
In all honesty, I don’t think I did well at the game at all. I was influenced by the small
amount of customer orders during the beginning of the game and I kept on thinking about the state
of the supplier, which resulted in my downfall. My strategy of adjusting to the customer orders in
order to lessen the impact on my supplier proved to be ineffective since I had multiple backlogs
within a few rounds of the activity. It was mainly because of my lack of attention in maintaining
the inventory level and not expecting the customer orders to rapidly increase. If I were to play the
game again, I would maintain a specific level of inventory by increasing my orders from suppliers,
regardless of customer orders. In my opinion, this would lessen the backorders since I have an
allowance in my inventory level, if ever the customer orders increase.

6. Plot the inventory/backlog (with backlog negative as negative inventory) and your orders to
your suppliers on one graph. What behavior pattern do you see? Why does cost each behave this
way? What is the relationship of these two graphs? Explain the relationship. How are the graphs
related to the way in which you make decisions? If you changed the way you made decisions
would the graph significantly change? Why or how?

INVENTORY
25
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
-5
-10
-15
-20
 The trend in the inventory level was increasing until week 7 and began to decrease in week
8. However, the inventory level began to increase once again in week 13 but also started to
decrease in week 20. The reason behind this behavior pattern is because from weeks 1 to 7, the
customer order was 4 units and the units from suppliers were more than enough to meet 4 units,
hence the increasing level. It began to decrease in week 8 since the customer orders increased to
10 units and the orders placed during the earlier part of the activity weren’t enough to continuously
meet the customer orders. The inventory level began to increase once again since the large amount
of orders placed started to meet demands while satisfying backlogs. Eventually, the inventory
levels decreased once again on week 20 since the customer orders increased to 20.

SUPPLIER ORDERS
40
35
30
25
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

The trend of my orders placed shows my indecisiveness in placing orders since there was an
internal conflict between adjusting to customer orders and thinking about the possibility of
backlogs of the supplier. It can be seen that even if the customer orders increased in week 8, I did
not significantly increase my orders placed. I significantly increased the amount of orders placed
only when the backlogs started to accumulate. From weeks 10 to 19, it was a continuous battle
between increasing orders placed to decrease backlogs and lowering orders placed to lower
backlogs of the supplier. Learning from my mistakes, I significantly increased the amount of orders
placed to the suppliers when the customer orders increased in week 20.

7. Plot your inventory/backlog together with the orders of your customer (ask data from them) on
one graph. What behavior pattern do you see? Why does cost each behave this way? What is the
relationship of these two graphs? Explain the relationship. How are the graphs related to the way
in which you make decisions? If you changed the way you made decisions would the graph
significantly change? Why or how?
 INVENTORY VS CUSTOMER ORDERS
Inventory Customer orders

30

20

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
-10

-20

It can be seen in the graph that from weeks 1 to 7, my inventory level was able to meet the
customer orders but when the customer orders increased in week 8, my inventory level began to
decline. From weeks 8 to 13, my inventory level was being affected by the small amounts of orders
I placed to the suppliers because of my complacency. Trying to make up for my mistakes by
ordering a large amount of units from the supplier, weeks 14 to 19 had an increasing trend. In week
19, I was able to meet the customer demands while satisfying all backlogs. However, my inventory
level decreased once more when the customer orders jumped to 20 units. The graphs showed how
I was dependent on customer orders in making ordering decisions which significantly affected my
inventory and ultimately, my costs.

8. Plot your customer orders with your own orders to your supplier. What behavior pattern do
you see? Why does cost each behave this way? What is the relationship of these two graphs?
Explain the relationship. How are the graphs related to the way in which you make decisions? If
you changed the way you made decisions would the graph significantly change? Why or how?

CUSTOMER ORDERS VS SUPPLIER

ORDERS
Supplier orders Customer orders

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
 During weeks 1 to 9, I had the same strategy of ordering low amounts of units from the
supplier to avoid causing backlogs for my supplier since I was meeting the customer orders from
weeks 1 to 9. However, my strategy changed in week 10 because my inventory level was not
enough anymore to meet the customer orders and I had backlogs during this week. I started to
order large amounts of units from the supplier to meet customer demands while satisfying backlogs
hence, the supplier order line is above the customer order line in the graph. In weeks 17 to 19, the
supplier started to have backlogs due to my large orders. The same strategy was used all throughout
the activity, which is why large amounts of units were ordered when the customer orders increased
to 20 in week 20.

9. Draw the more likely behavior of the graphs (inventory/backlog, customer orders and orders
from the suppliers) if we continued the game? Explain why you think it would be this way. What
is your basis for concluding that the likely behavior is how you expect it? Justify.

30
20
10
0
-10
-20
-30
-40
-50
-60
-70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Values Forecast Lower Confidence Bound Upper Confidence Bound

Forecast for the inventory level

70

60

50

40

30

20

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Values Forecast Lower Confidence Bound Upper Confidence Bound

Forecast for the orders from supplier

 40
35
30
25
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Values Forecast Lower Confidence Bound Upper Confidence Bound

Forecast for the customer orders

With 95% as the confidence interval, a forecast for the inventory level, customer orders,
and orders from the suppliers were generated to determine the behaviors of each of the graphs if
the activity was continued until the 35th week. The forecast of each graph contains an upper and
lower confidence bound and a forecasted behavior, which can be found in between the two
confidence bounds. This forecasted behavior is the most likely behavior of each graph. It can be
inferred that as the customer orders increase, the inventory level decreases causing more backlogs
and thus, increasing the orders from suppliers to try and satisfy the said backlogs.

10. Imagine that you would apply forecasting in the game? Would the results change? Why or
why not? Try other techniques like MRP or EOQ. How will they perform?
By applying forecasting in question #9 to determine the outcome if the activity was
continued, it can be seen that the results did not change as the customer orders increased, inventory
level decreased, and orders to the supplier increased. However, if forecasting was applied during
the earlier part of the activity, the results would change since backlogs could have been avoided.
By using a forecasted demand along with the lead time and a safety stock, units will arrive on
schedule since an order point will be determined. In addition to this, the utilization of techniques,
such as MRP and EOQ, would significantly improve the results of the activity since a more detailed
scheduling plan would help avoid backlogs by maintaining a specific inventory level and
ultimately, lower costs.
11. Learnings: What insight did you learn from the exercise? To what system can it be applied
and used? What ability did you learn? Where can this be applied?
An insight that I learned from the activity is that I have to improve on my ability of
foresight. I need to be able to determine things before it actually happens to avoid any problems.
In terms of this activity, I should have been able to maintain an inventory level that had allowance
to survive any sudden increase in demand. This ability can be applied not only in business but also
in our daily lives, wherein we should have foresight in dealing with our day-to-day life and that
we have to be ready for anything so that when it does happen, it doesn’t hurt us that much.