The game has four players per team; Retailer, Wholesaler, Distributor, and Factory. The pennies represent cases of beer. A deck of cards represents customer demand. Each simulated week, customers purchase from the retailer, who ships the beer requested out of inventory. The retailer in turn orders from the wholesaler, who ships the beer requested out of their own inventory. Likewise the wholesaler orders and receives beer from the distributor, who in turn orders and receives beer from the factory, where the beer is brewed.
At each stage there are shipping delays and order processing delays. The players ' objective is to minimize total team costs. Inventory holding costs are $.50/case/week. Backlog costs are $1.00/case/week, to capture both the lost revenue and the ill will stock-outs cause among customers. Costs are assessed at each link of the distribution chain. (Sterman,1999).
Since the Beer game has been around since the 1960’s the game is the best known simulation game of its kind and allows players a glimpse of the intricacies within the supply chain. Other games that deal with supply chain management are: Poker Chip, Wood Supply, LEAP Supply Chain, ITL and LEGO games (Cox, 2006). The Beer Game far outreaches all the other games; its focus is on dynamic complexity within the supply chain.
References: 1) Sterman, John D. (1992, October).Teaching Takes Off Flight Simulators for Management Education (Online) November 1, 2007.http://web.mit.edu/jsterman/www/SDG/beergame.html. 2) Wikipedia. Supply Chain Management, Beer Game. November 1, 2007. http://en.wikipedia.org/wiki/Bullwhip_effect. 3) Cox, James F. III, The Poker Chip Game: A Multi-product, Multi-customer, Multi-echelon, Stochastic Supply Chain Network Useful for Teaching the Impacts of Pull versus Push Inventory Policies on Link and Chain Performance, Informas Transactions on Education May 2006. http://ite.pubs.informs.org/Vol6No3/CoxWalker. 4) No author. The Beer Game Production-Distribution Exercise: Running Large Sessions July 25, 2002. http://www.public.asu.edu/~kirkwood/sysdyn/BGame/BGame.htm 5) Sterman, J.D. (1988). Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision Making Experiemnt. Management Science, 35(3), 321-339. http://web.mit.edu/jsterman/www/. 6) Hoffman, Ivan. 2000. The Strategic Alliance. 2000. http://www.ivanhoffman.com/strategic.html. 7) Gilbert, Allorie and Shim, Richard. July 9, 2003. Walmart Cancels “Smart Shelf” Trial. http://www.news.com/2100-1017_3-1023934.html. 8) Fagaly, Russ. February 15, 2007. Wal-Mart’s Radio-Tracked Inventory Hits Static..Wall Street Journal. http://walmartwatch.com/blog/archives/wal_marts_radio_tracked_inventory_hits_static/. 9) No Author. August 24, 2007. The Wal-Mart Story. http://www.walmartfacts.com/content/default.aspx?id=1 10) Kotelnikov, Vadim. 2001. Building Partnerships ttp://www.1000ventures.com/business_guide/partnerships_main.html.