27th July 2010: Rail Meltdown and the Bullwhip Effect

Metro Rail Meltdown (Source: Tom McKendrick, The Age)

Hong Kong’s Metro Trains took over Melbourne’s rail network from French operator Connex on 30th November 2009.

It’s been a troubled transition: cancelled trains, union lobbying, procurement delays, failures in overhead electrical systems . . . and the project budget blowout and rollout delays of the Myki smartcard system.

This morning, the failure of overhead electrical systems at Melbourne’s Southern Cross Station threw the network into the congestion, delays and emergent dynamics that occur in the Beer Game simulation taught at MIT to supply chain management and management systems students. Beer Game players usually encounter the Bullwhip Effect: oscillations and variations in the supply chain that affect player decisions, inventory forecasts, and can lead to subgames.

Melbourne commuters today experienced MIT’s Beer Game and the Bullwhip Effect (PDF) thanks to Metro’s problems. Delays at a single point changed the system. The electrical systems fault created a cascade for early morning commuters who were stranded by no connecting services or stuck in the London-style loop tunnel around the city grid. It was like being stuck in a scene from Godfrey Reggio‘s hypnotic film Koyaanisqatsi (1982) without the Philip Glass score.

Attempts to reduce the congestion and overload — extra buses and trams, and individual commuter decisions to take cars — created secondary cascades and effects. The Bullwhip Effect also created subgame opportunities for some players: the sudden rise in demand for taxis, and the long waiting lines at taxi ranks, enabled drivers to be selective about their best fares . . . which meant a forty minute wait for a driver who had just finished the Tullamarine Airport run.