Beer Game

Topics: Supply chain management, Inventory, Supply chain Pages: 6 (2035 words) Published: October 14, 2008

The Beer Game is a role-playing simulation developed at MIT in the 1960's to clarify the advantages of taking an integrated approach to supply chain management. We have developed this computerized version of the Beer Game to make it easier to play the Beer Game as well as to illustrate certain Supply Chain Management issues which cannot be demonstrated by the traditional (non-computerized) Beer Game. This game is distributed with the textbook "Designing and Managing the Supply Chain" by D. Simchi-Levi, P. Kaminsky, and E. Simchi-Levi.

The Scenario

The Beer Game is a simulation, in which you, the player, are faced with the following scenario:

In this exercise, you will be faced with the following scenario: Consider a simplified beer supply chain, consisting of a single retailer, a single wholesaler which supplies the retailer, a single distributor which supplies the wholesaler, and a single factory with unlimited raw materials which makes (brews) the beer and supplies the distributor. Each component in the supply chain has unlimited storage capacity, and there is a fixed supply lead time and order delay time between each component.

Each week, each component in the supply chain tries to meet the demand of the downstream component. Any orders which cannot be met are recorded as backorders, and met as soon as possible. No orders will be ignored, and all orders must eventually be met. At each period, each component in the supply chain is charged a $1.00 shortage cost per backordered item. Also, at each period, each component owns the inventory at that facility. In addition, the wholesaler owns inventory in transit to the retailer, and the distributor owns inventory in transit to the wholesaler, and the factory owns both items being manufactured and items in transit to the distributor. Each location .is charged $.50 inventory holding cost per inventory item that it owns. Also, each supply chain member orders some amount from its upstream supplier. It takes one week for this order to arrive at the supplier. Once the order arrives, the supplier attempts to fill it with available inventory, and there is an additional two week transportation delay before the material being shipped by the supplier arrives at the customer who placed the order.

The goal of the retailer, wholesaler, distributor, and factory, is to minimize total cost, either individually, or for the system.

Running the Simulation

NOTE: We have attempted to make the computerized version of the Beer Game faithful to the original version. Because of this, the sequence of events, particularly those relating to shipping and order processing delays, is a bit complicated. A careful reading of the description below will make the game clearer and more intuitive.

When the Beer Game is started, the following screen appears:

In this simulation, you take the role of a manager of one of the components of the beer supply chain, either the retailer, the supplier, the distributor, or the factory. This will be called the interactive role. The computer takes the remaining roles. On the game display, the interactive role is displayed in colour, and the remaining roles are displayed in gray. Also, the information for the interactive roles is displayed but the information for other roles is hidden (with the exception of backorder at the supply chain member immediately upstream from the interactive supply chain member). In the example screen displayed above, the distributor is the interactive role. Also, by downstream, we mean the direction of the supply chain leading to the external demand, and by upstream, we mean in the direction of the factory. In addition, we refer to components of the supply chain as facilities.

Order of events: The simulation is run as a series of weeks. Within each week, first the retailer, then the wholesaler, then the distributor, and finally the factory, executes the following series of events,...
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