Chapter 7: Supplement

1. Chapter 7: Supplement The Beer Game

2. The Beer Game Board and Initial Condition Figure 7A.1

3. The Beer Game • Supply chain consists of four stages • Factory • Wholesaler • Distributor • Retailer • Each stage is required to manage its inventory level through the placement of orders with its upstream supplier

4. Rules • There is a two-week delay between the retailer, wholesaler, and distributor • Production orders at the factory are available to ship three weeks after the production request • Objective is to minimize the sum of your total weekly costs • Only upstream communication are orders

5. Costs • Weekly costs have two components • Inventory cost • Backlog cost • Weekly inventory cost is $0.50/keg of beer in inventory at end of week • Backlog cost is $1.00/keg on backlog at the end of the week

6. Initial Conditions • Demand at the retailer stage have been stable at four kegs per week • Every order in supply chain has been four kegs • Each stage has maintained an inventory of 12 kegs • Warmer weather is expected to raise demand • Upcoming promotions are also expected to raise demand

7. Playing the Game • Will be assigned to one of the four stages • During play, will perform the five steps shown on the following slides • Must be completed in order shown • Each stage of supply chain must complete the tasks simultaneously • Only the final task requires a decision

8. Step 1

9. Step 2

10. Step 3

11. Top of Data Sheet Figure 7SA.2

12. Steps 4–6