Copyright 2013 John Wiley & Sons, Inc.

Chapter 7: Supplement

The Beer Game

7A-2

The Beer Game Board and Initial Condition

Figure 7A.1

7A-3

The Beer Game

• Supply chain consists of four stages1. Factory2. Wholesaler3. Distributor4. Retailer

• Each stage is required to manage its inventory level through the placement of orders with its upstream supplier

7A-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

7A-5

Costs

• Weekly costs have two components1. Inventory cost

2. 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

7A-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

7A-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

7A-8

Step 1

7A-9

Step 2

7A-10

Step 3

7A-11

Top of Data Sheet

Figure 7SA.2

7A-12

Steps 4–6