The Beer Game And The Bullwhip

"Ordinarily, serendipity and supply chains are not compatible; supply chains at their best are idealized expressions of order and predictability; serendipity is just the opposite. However, a moment of serendipity has led to a revolution in understanding how supply chains work. The serendipitous moment occurred when Carlos Daganzo, ITS Berkeley traffic flow theorist and professor of civil engineering, analyzed supply chain behavior using traffic flow theory and found a solution to the vexing phenomenon known as "the Bullwhip Effect," first described in the early 1960s. But because the breakthrough came from someone outside the specialized world of supply chains, it has created little more than a ripple.

...The story starts with the Beer Game, a well-known simulation tool used to teach how supply chain theory works in the real world. A professor places orders for beer, and a chain of suppliersâ€"the students in his classâ€"place orders with one another to fill his requests, from the hops grower down to the bottling plant and wholesaler.

...Furthering the traffic analogy, the oscillations in the supply chain sounded to Daganzo like the oscillations that happen to traffic upstream of a bottleneck. The drivers upstream of a bottleneck typically experience much wider oscillations in traffic speeds, more stop-and-go driving, than those who are passing through."

Thanks to NewsBITS Number 2