Valuing Lead Time

The Lead Time Manager is a simulation-game we developed at the University of Lausanne to illustrate our research insights about the impact of lead time reduction on volatility exposure and cost of mismatch between supply and demand.

In this simulation-game, the player takes the role of a manager faced with a supply and demand problem. The shop sells two types of ski jackets: Fashion and Standard, with different cost, price and demand volatility characteristics. Each jacket has a variable demand each season, for which the mean and median are given.

The manager can choose to order offshore to a long lead time supplier, or to develop a local production. When ordering offshore, the order must be done before demand for the season is known. When producing locally, employees are hired and machines are bought, creating fixed costs, but production can be done on-demand.

Trial and errors make the tradeoff between lower unit cost and longer delay very palpable.

A video demonstrating the interface:

A paper from Jordi Weiss detailing the simulation-game and its pedagogical context, published in OMER:

Play!