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Beer-Game

The Beer Game is an educational simulation designed to illustrate supply chain dynamics and the impact of decision-making on inventory costs. Participants take on roles within a supply chain, managing the flow of beer from factory to consumer while balancing inventory holding and backorder costs. The objective is to minimize total costs through effective coordination and communication, with data collected for analysis at the end of the game.

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JaiSantoshJayaprakash
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30 views

Beer-Game

The Beer Game is an educational simulation designed to illustrate supply chain dynamics and the impact of decision-making on inventory costs. Participants take on roles within a supply chain, managing the flow of beer from factory to consumer while balancing inventory holding and backorder costs. The objective is to minimize total costs through effective coordination and communication, with data collected for analysis at the end of the game.

Uploaded by

JaiSantoshJayaprakash
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The Beer Game

Topic: Supply chains.


Purpose: To introduce participants to the supply chain concept and to the effects
decisions along the chain have on inventory levels and costs.

Introduction: In this game the retailer sells cases of Beer to a consumer and orders cases of Beer
from the wholesaler. The wholesaler sells cases of Beer to the retailer and orders cases of Beer from
the distributor; and the distributor sells cases of Beer to the wholesaler and orders Beer from the
factory (brewery). The factory produces the Beer. For each week of play ( a period), each participant
follows the same cycle in this order and concurrently:

1. Receive shipments and advance shipping delays,


2. Ship cases of Beer according to new orders and backlog, subject to inventory availability,
3. Count inventory of cases of Beer,
4. Advance the order slips, and
5. Place orders for (or brew) more Beer.
An animation of how steps 1-5 is available in the Power-Point file Beer Game.pptx on Canvas.

There are only two costs involved in this supply chain at each location: inventory holding costs
($0.50/case/week) and backorder costs ($1.00/case/week). Each team has the goal of minimizing the
sum of those costs by balancing the cost of having inventory (inventory holding cost) with the cost of
being out of inventory when a customer orders Beer (backorder cost).

Each participant keeps track of his or her own costs. At the end of the game, the total game cost for
the distribution system is the sum of the four individual participants’ total costs (retailer cost +
wholesaler cost + distributor cost + factory cost). The goal is to Minimize team costs.

The game begins with a fully loaded “pipeline” of cases of Beer:


- 12 cases of inventory in each of the “current inventory” squares,
- 4 cases in each of the “production delay” squares,
- 4 cases in each of the “shipping delay” squares, and
- orders for 4 cases in each “order placed” and “incoming order” squares (these are placed
face down so that other participants cannot anticipate their demand).

Each position can communicate orders in written form only which will written on a post it note
face down. No other form of communication is allowed between positions.

The game will be played during class with 6-9 people assigned to each Game. Data observed from the
game will be recorded in an Excel Template (please download the template from Canvas). At the end
of the game, data from all locations should be merged upon which graphs and other performance
measures and data will be generated. This will be valuable to players of the game in observing and

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analyzing the behavior of the supply chain. The observations and results for each game should be
complied in a short report to be submitted.

How to play the Game-Moving Instructions:


We start the game with the following initial conditions at each location:

On hand = 12 units,
Shipping delay boxes = 4 units,
Order boxes = 4 units (written on cards)

In each period of the game, we go through the following sequence of actions, which you are
responsible to coordinate:

1. Move the contents in shipping delay 1 to inventory.

2. Move the contents in Ship delay 2 to shipping delay 1.

3. Pick the Incoming Order card and record the observed demand.

4. Fill the order.

5. Record the On-Hand inventory (or backorder) status and update the Shipping delay
status.

6. Place the order.

7. Record the order placed and the previous order.

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