Inventory Simulation Game
An excellent exercise for a hands-on understanding of the impact and cost of inventory policies was developed by Keith Willoughby (Bucknell University) and Ken Klassen (Brock University). The objective, not unexpectedly, is to maximize revenue against one of three normally distributed demand functions while driving ordering, shortage, and holding cost to a minimum.
The game, He Shoots, He Scores, is described in Chapter 12 of the Instructor’s Resource Manual. The Student Instructions handout is also there. These are also available in myomlab (see below). EOQ material is presented in the text in Chapter 12 and 14, while lot-for-lot and PPB are presented in Chapter 14. All are available in POM for Windows software as are Wagner-Whitin, Period Order Quantity, and a User Defined option.
The IRM and the Instructor Resources Section of myomlab suggest 30 to 40 minutes, but with any summary / analysis that is tight. I have run the game in a 50-minute period, but even then, I needed to keep an undergraduate class moving. Any introduction to inventory policies or software mechanics suggests a longer class.
To enliven the class, I give points for the team with the highest profit (say 10 points for the highest profit) and reduce the scores down to 1 point. With ten 3-person teams, a 30-student class is easily accommodated. I let the students be as creative as they want in selecting and implementing an inventory policy (EOQ, PPB, Wagner-Whitten, or something of their own creation, etc.) and use any software they want.
Another option is to assign various inventory policies to teams and then compare the results. This has the advantage of moving the class to a more structured discussion of inventory management…but it is less fun.
The instructions, student handout, and excel spreadsheet are available in myomlab under the ‘Instructor Resources’ button on the left hand navigation. Once on the ‘Instructors Resources’ page, look under the heading ‘Instructor Supplements’ for the bullet point, ‘See the Simulation Games.’ This shows three simulation exercises; click on the first one, the ‘Inventory Simulation Game;’ then click on ‘spreadsheet’ on the left top of the first page to get to the Excel spreadsheet.
My experience with the exercise is all positive … I recommend it.