The Beer Distribution Game

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PART ONE

Introduction:

The Beergame consists of complex actions with high number of agents involved can effect the interaction and/or communication between those agents who are working independently following simple rules. In this report we will study the use of the Simulation game (Beer Distribution Game) to understand the actions of simple and widely use of this system in the Supply Chain Management (SCM). The Beer Game was developed in the 1960s at the Massachusetts Institute of Technology’s (MIT) Sloan School of Management (Sterman,1989; Senge,1992), it has been successful to attract the attention of SCM practitioners and academics. The layout of the Beer Distribution Game (BDG) is illustrated in figure 1 below.

Figure 1 Beer Distribution Game Layout

The BDG consists mainly of four independent agents namely Factory, Distributor, Wholesaler and a Retailer within the supply chain. The role i played during the gameplay was of a Retailer BIMBO ONE (BIMB1). The game starts with the customer placing the order to a retailer. The opening inventory provided to BIMB1 was of 65 cases and during the first week the customer order placed was of 28 cases and thereafter the order of 32 in the second week. Retailer BIMB1 supplied the customer with requested demand aiming to maintain enough capacity of stock to supply the customer by ordering supplies of more cases from a wholesaler, which in my case was BARNEY. The wholesaler functions in somewhat similar pattern to the retailer and order their supply of cases from distributor CENTRAL. Then CENTRAL order their supply of cases to the FACTORY. Factory aims to produce more amount of beer as it has to supply it to couple more distributors namely NORTH and SOUTH as well. It takes about two weeks when the supplier ships the order to reach to its agents and similarly works throughout the supply chain. Hence, the order flows in the upstream direction whereas the supply flows in downstream direction. The main task



References: Forrester, Jay W. (1976). Business structure, economic cycles, and national policy. Futures 8:3 195-214 Hau L. Lee, V. Padmanabhan and Seungjin Whang. (1997) The Bullwhip Effect in Supply Chain. In MIT Sloan Management Review 38. Retrieved from http://sloanreview.mit.edu/article/understanding-the-bullwhip-effect-in-supply-chains/ Wright J Nevan, and Race P. (2004), The Management of Service Operations, 2nd Edition, Thomson Learning: London (First print: June 2004, 2nd print: August 2004). Senge, P.M. 1992, The Fifth Discipline: the art and practice of the learning organization, Random House, Sydney Sterman, J. D. 1989. Modeling managerial behavior: misperceptions of feedback in a dynamic decision making experiment,” Management Science 35(3): 321-339.

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