THE BEER GAME
1
AGENDA
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Presentation of İstanbul Kültür University
Presentation about Supply Chain
Management
Introduction to “Beer Game”
Lunch Break
Selection of “Beer Game-Team Members”
Playing Beer Game
Entry of game results to computer
Debriefing of Beer Game
Announcing the WINNER team
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THE BEER GAME - 1
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The beergame (or beer distribution game) was originally
invented in the 1960s by
Jay Forrester at MIT as a result of his work on system
dynamics.
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While the original goal of the simulation game was to
research the effect of systems structures on the behaviour
of people (“structure creates behaviour”), the game can be
used to
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demonstrate the benefits of information sharing,
supply chain management and
eCollaboration in the supply chain.
A range of different versions of the beergame have
emerged over the years.
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THE BEER GAME - 2
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The “Beer Game” is a
role-play simulation of productiondistribution system
for a consumer product, such as beer.
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Game lets students experience typical
coordination problems of (traditional)
supply chains
in which information sharing and
collaboration does not exist.
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THE BEER GAME - 3
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In the “Beer Game” students enact a four stage
supply chain;
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retailer
wholesaler
distributor
Factory
The task is to produce and deliver units of beer:
the factory produces and the other three
stages deliver the beer units
until it reaches the customer at the downstream
end of the chain.
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THE BEER GAME - 4
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The aim of the players is rather simple:
each of the four groups has to fulfill
incoming orders of beer by placing
orders with the next upstream party.
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Communication and collaboration are not
allowed between supply chain stages, so
players create bullwhip effect
continuously. This effect is unavoidable.
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OBJECTIVE OF THE
BEER GAME
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OBJECTIVE OF THE BEER
GAME
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In real business life, there are many factors that
effect decision making like financial factors,
machine breakdowns, resource and capacity
constraints etc. In this game, all these factors
will be ignored except
inventory cost (holding cost) and
backordering cost (backlog cost, stock-out
cost).
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For each team, the objective of the game is to
minimize total cost of their supply chain.
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ESSENTIAL RULES - 1
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Every order has to be fulfilled,
either directly (if the players’ inventory is enough)
or later in subsequent rounds.
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Inventory and backlog result in cost;
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each item in stock costs EUR 0.50 per week,
while each item on backlog costs EUR 1.00.
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Hence, the optimal strategy for the players is to run their
business with as little stock as possible without being forced to
“move into backorder”.
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Players are not allowed to communicate.
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No speaking, no looking at other’s cards, no cheating.
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During each week, the Retailer is the only one who sees the
customers’ actual demand. The Retailer is prohibited from telling
the demand to the Wholesaler, Distributor, and Factory.
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ESSENTIAL RULES - 2
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Values of game chips as below;
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BLACK
WHITE
BLUE
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5 beers
1 beer
0 beer (if shipping quantity is zero)
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While writing on the order card, underline 6 and 9 to avoid of
confusion.
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It is allowed to make orders with zero quantity. In such cases
write zero on the order cards.
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Similarly, it is allowed to ship zero quantity when inventory is
zero.
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If shipping quantity is 0; player has to put a blue chip on “shipping
delay” box.
When a team finishes their steps for a week, they HAVE TO WAIT
FOR THE BELL RING to start the next week.
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If they don’t wait the bell ring, they will pay 50 Euro as penalty.
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Team member roles
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R1: Retailer, R2: Retailer (score sheet)
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W1: Wholesaler, W2: Wholesaler (score sheet)
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D1: Distributor, D2: Distributor (score sheet)
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F1: Factory, F2: Factory (score sheet)
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C: Carrier
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P: Producer
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THE BOARD
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Step 2: Example #1
STEP 2: “Look at Incoming Order, and
fill Backlog & Order.”
INCOMING
ORDER
5
CURRENT
INVENTORY
(Orders to Fill) = (Current Backlog) + (Incoming Order)
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If (Current Inventory) >= (Orders to Fill), then
(Quantity Shipped) = (Orders to Fill)
(New Inventory) = (Old Inventory) - (Quantity Shipped)
(New Backlog) = 0
If (Current Inventory) < (Orders to Fill), then
(Quantity Shipped) = (Current Inventory)
(New Inventory) = 0
(New Backlog) = (Orders to Fill) - (Quantity Shipped)
QUANTITY
SHIPPED
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CURRENT BACKLOG
(from Form)
0
(Orders to Fill)
(Current Inventory)
(Quantity Shipped)
(New Inventory)
(New Backlog)
=
>=
=
=
=
0 + 5 = 5
(Orders to Fill)
5
8 - 5 = 3
0
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Step 2: Example #2
STEP 2: “Look at Incoming Order, and
fill Backlog & Order.”
INCOMING
ORDER
3
(Orders to Fill) = (Current Backlog) + (Incoming Order)
If (Current Inventory) >= (Orders to Fill), then
(Quantity Shipped) = (Orders to Fill)
(New Inventory) = (Old Inventory) - (Quantity Shipped)
(New Backlog) = 0
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CURRENT
INVENTORY
QUANTITY
SHIPPED
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CURRENT BACKLOG
(from Form)
5
If (Current Inventory) < (Orders to Fill), then
(Quantity Shipped) = (Current Inventory)
(New Inventory) = 0
(New Backlog) = (Orders to Fill) - (Quantity Shipped)
(Orders to Fill) =
(Current Inventory) >=
(Quantity Shipped) =
(New Inventory) =
(New Backlog) =
5 + 3 = 8
(Orders to Fill)
8
10 - 8 = 2
0
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Step 2: Example #3
STEP 2: “Look at Incoming Order, and
fill Backlog & Order.”
INCOMING
ORDER
10
(Orders to Fill) = (Current Backlog) + (Incoming Order)
If (Current Inventory) >= (Orders to Fill), then
(Quantity Shipped) = (Orders to Fill)
(New Inventory) = (Old Inventory) - (Quantity Shipped)
(New Backlog) = 0
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CURRENT
INVENTORY
QUANTITY
SHIPPED
6
CURRENT BACKLOG
(from Form)
0
If (Current Inventory) < (Orders to Fill), then
(Quantity Shipped) = (Current Inventory)
(New Inventory) = 0
(New Backlog) = (Orders to Fill) - (Quantity Shipped)
(Orders to Fill)
(Current Inventory)
(Quantity Shipped)
(New Inventory)
(New Backlog)
=
<
=
=
=
0 + 10 = 10
(Orders to Fill)
6
0
10 - 6 = 4
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Step 2: Example #4
STEP 2: “Look at Incoming Order, and
fill Backlog & Order.”
INCOMING
ORDER
10
(Orders to Fill) = (Current Backlog) + (Incoming Order)
If (Current Inventory) >= (Orders to Fill), then
(Quantity Shipped) = (Orders to Fill)
(New Inventory) = (Old Inventory) - (Quantity Shipped)
(New Backlog) = 0
4
CURRENT
INVENTORY
QUANTITY
SHIPPED
4
CURRENT BACKLOG
(from Form)
16
If (Current Inventory) < (Orders to Fill), then
(Quantity Shipped) = (Current Inventory)
(New Inventory) = 0
(New Backlog) = (Orders to Fill) - (Quantity Shipped)
(Orders to Fill)
(Current Inventory)
(Quantity Shipped)
(New Inventory)
(New Backlog)
=
<
=
=
=
16 + 10 = 26
(Orders to Fill)
4
0
26 - 4 = 22
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