Improvement of Supply Chain
Efficiency with a Learning Game
Ken Dozier & David Chang
Western Research Application Center
World Society and Engineering Academy and Society
Conference
February 25, 2012
Harvard, Cambridge
USA
Western Research Application Center (WESRAC)
Bio – David
Semiotics Syntactics: Plasma Physics
* Stamper, Information, Norms and Systems (1996)
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Introduction
• Used a Design Research Framework to create a
Learning Object Game Immersed in Complex
Systems (LOGICS) process and product artifact.
• Used the NetLogo “Hubnet” capability to immerse
a human agents into the simulate the dynamics of
the classic Sterman “Beer Game”.
• Create a persuasive experience that nudged
players abandon heuristics and invest in IT
rationality to improve economic performance in a
counter intuitive dynamic business system.
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2. Background
• Observations
– Cyclic phenomena in complex dynamic business systems
• Ubiquitous & Disruptive
• Example: Wild oscillations in supply chain inventories
• Results of Observations and Simulations
–
–
–
–
Negative Feedback Systems with Delays Oscillate
Phase dependence of oscillations on position in chain
Understanding of Managements Personality Impact
Commitment to Rationality Dramatically Increases Financial
Performance
• MIT Sterman “Beer Game” Simulation
– Single Customer, Single Product, 4 Tier Supply Chain
– Published Suboptimal Performance 1 Order of Magnitude
– Experimental Suboptimal Performance 2 Orders of Magnitude
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2.1 Beer Game
23rd Order Differential Equation
Model Developed by Dr. Nathan B. Forrester of A.T. Kearney, Atlanta, 2000
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2.1.1 Sterman Single Repetition
Teaching Takes Off: Flight Simulators for Management Education, Sterman (1992)
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2.1.2NetLogo Demonstration
Steady
state at 4
cases per
order.
Wilensky, U. (1999). NetLogo.
http://ccl.northwestern.edu/netlogo
. Center for Connected Learning
and Computer-Based Modeling.
Northwestern University,
Evanston, IL
Beer Game Demo Densmore, O. June 2004
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2.1.3A Single Change
A 4 Unit
Constant
Demand is
Changed to an 8
Unit Constant
Demand
Wilensky, U. (1999). NetLogo.
http://ccl.northwestern.edu/netlogo.
Center for Connected Learning and
Computer-Based Modeling.
Northwestern University, Evanston, IL
Beer Game Demo Densmore, O. June 2004
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2.2 Analytical Models
Direction
Cooperation
Efficiency
Proficiency
Competition
Concentration
Innovation
Source: “The Effective Organization: Forces and Form”,
Sloan Management Review, Henry Mintzberg, McGill University 1991
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2.2.1 Conflicting Temporal Layers
Source: Gus Koehler, University of Southern California
Department of Policy and Planning, 2002
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2.2.2 Layers of Communication
Source: Gus Koehler, University of Southern California
Department of Policy and Planning, 2002
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2.2.3 Government Dynamics
Source: Gus Koehler, University of Southern California
Department of Policy and Planning, 2002
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2.2.4 High Level of Complexity
Source: Gus Koehler, University of Southern California
Department of Policy and Planning, 2002
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2.2.5 Bureaucratic Factor
Low β
Market Redefinition
Supply-chain Expansion
Supply-chain Discovery
Business Model Redefinition
Business Model Refinement
Business Process Redesign
Business Process Improvement
High β
Seven Organizational Change Propositions Framework,
“Framing the Domains of IT Management” Zmud 2002
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2.2.6 Plasma Theories
• Advanced plasma theories are extremely important when
one tries to explain the various waves and instabilities
found in the plasma environment. Since plasma consist of
a very large number of interacting particles, in order to
provide a macroscopic description of plasma phenomena it
is appropriate to adopt a statistical approach. This leads to
a great reduction in the amount of information to be
handled. In the kinetic theory it is necessary to know only
the distribution function for the system of particles.
Source: University of Oulu, FInland
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2.2.7 JITTA
•
Investigated the β bureaucratic factor and it’s inverse
organizational temperature T (dispersion) in the 5
metropolitan service areas surrounding Los Angeles.
• Investigated the ability of Stratification to Differentiate
impact of IT Investment on output and job creation
– Large firms invest in IT to increase output and eliminate jobs
– Small firms invest in IT to increase output and expand workforce
• Investigate Partition Function Z, Cumulative Distribution
Function opened the linkage to Statistical Physics
– Dozier-Chang (06) Journal of Information Technology Theory and
Application
• Math Intensive Solution Ideal for Cloud Architectures
– Marginal Cost on a per transaction basis
– “Give them a Browser Razor Sale them Transaction Blades”
– Accommodates Both Large and Small Firms
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2.2.8Maxwell-Boltzmann Distribution
Comparison of U.S. economic census cumulative number of companies
vs shipments/company (blue diamond points) in LACMSA in 1992 and
the statistical physics cumulative distribution curve (square pink
points) with β = 0.167 per $106
4000
3500
3000
2500
2000
1500
1000
500
0
0
10
20
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30
40
50
60
2.2.9 Advantages
• This model does allow examination of the optimal
timing for interventions of these propagations and
parametric forces. Something not possible in
simulation models to date
• The most effective paramedic interventions will be
those that use information technologies to
harmonize with naturally occurring normal modes
of the system.
• Disturbances from non optimal interventions
move up and down the supply chain.
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3. Learning Object Game
Design Science
Framework
Takeda, Veerkamp,
Tomiyama, Yoshikawa (AI)
Purao (IS&T)
Dasgupta (IS&T)
Vaishnavi & Kuechler, Design Science Research Methods and Patterns (2008)
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3.1 Kernel Theories
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3.2 Integrated Development
Environment
LOGICS
Behavior Space
Generator
Participatory ABMS
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Analysis Space
3.3 Player Interface
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3.4 Instructors Console
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3.5 Results
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3.6 Design1 versus Design5
Design1 Normally Distributed
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Design5 Highly Skewed
4. Discussion
Design 5
Trial
Player 1 Player 2 Player 3
1
2
3
4
5
4356
4362
3393
179.3
179.3
Modest Sample Size
IT Orders
15588
4289
8156
1563
2885
6243
16650
5840
1491
1876
87% 21%
55%
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4.1 Binomial Distribution
•
Results can be interpreted in a self consistent manner since each trial can be considered
independent.
A “success” occurs when the total cost is less that some target
Binomial Distribution is Appropriate for a Modest Sample Size
There is a 7 fold improvement in target teaching costs in only five trials
This is a dramatic improvement in past experience with reinforced learning for the Beer
Game problem
•
•
•
•
Teaching Target Costs from Box Plots
6000
Total cost
5000
4000
3000
2000
1000
0
0
1
2
3
4
5
6
Trial number
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N=3 p=1/7
4.2 Someone is Getting Rich on the Waste
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4.3 Findings and Video Demos
• Game 1: Manual ordering with repetition. My control group average
10 times larger than Sterman.
• Game 2: Manual ordering using Senge’s “Do nothing strategy” Retail
absorbs the bulk of the costs
• Game 3: Local computing enables Wal-Mart's to kill supplier factories
• Game 4: Any technical solution is better than intuition
• Game 5: If we cooperate we make 100 times more money.
• The Optimal to Average performance ration of 100 to 1
• Much room for improvement
•
•
•
•
•
Asynchronous interaction between tiers.
Realistic demand time series
Realistic normal modes and associated optimal values
Larger number of participants
World side distribution on the Cloud
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Contact Information
For more information, please
Visit the Learning Center
http://wesrac.usc.edu
kdozier@usc.edu
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