• Conventional board

game Beer Distribution

Game

Delay Delay Factory Delay Delay Distributor

Delay Delay Wholesaler Delay Delay Retailer

Orders

Material

Please use “Internet Explorer”

The Beer Supply Chain

The beverage syrup is manufactured in the Factory

The syrup is shipped via rail to distribution centers (bottling centers)

From the bottling centers it is sent to a wholesale site. Finally, the cases are

trucked to the retail outlet.

We just look at the single linear chain.

An important consideration in making decisions is the delay in the movement of

beer through the supply chain.

• If during period 3 the Wholesales decides to ship 10 cases of beer to the

Retailer (upon whose request),

• the beer would take periods 4 and 5 to move to the Retailer and then

would be available for sale by the Retailer at the beginning of period 6.

• Similarly, orders are not visible to the upstream player for one period. For

example, if the Wholesaler places an order in period 3, the order is received by

the Distributor at the beginning of period 4.

• It will take longer if one site does not have enough on-stock/inventory

t t+1 t+2 t+3

Shipment

Shipment

t -1

In period 2 (t-1), the Retailer places 10 cases, period 3 (t) the Wholesales receives

the order and decides to ship 10 cases to the Retailer. Then, the Ret. Receives and

can use these 10 cases for meeting demand in period 6 (t+3).

4

Events in each period

Receives Beer (after Information/Shipping Delay) Receives Orders from Downstream (after Inf./Mail Delay) Ships Beer Downstream to meet Orders * (pull -- responsive)

Orders Beer from Upstream (the only decision) * If the immediate upstream has stock!

Each Stage:

Distributor

In each period, every participant follows the same cycle:

After your decision,

1. The system is updated by me where new orders and

shipments are received, shipments enroute are advanced, and

inventory levels and backorder positions are calculated (these

tasks are done automatically).

2. The player updates the status screen and reviews current

position/status.

3. A shipping decision is made according to new orders and

backlog, subject to inventory availability,

4. An ordering decision is made for more beer.

Game

Login • Each student takes

on a different role.

http://www.pom.edu/

4

• Each student takes on a different role. Retailer, or

Wholesaler, or

Factory

4

• Each student takes on a different role.

Quant’ty

you order

Retailer, or

Wholesaler, or

Factory

“Status”

“Graph”

Quant’ty you

ship to your

customer

Player

Screen

• Students make decisions each period.

• Individual and team evaluations.

In each period, every participant follows the same cycle:

After your decision,

1. The system is updated by me where new orders and

shipments are received, shipments enroute are advanced, and

inventory levels and backorder positions are calculated (these

tasks are done automatically).

2. The player updates the status screen and reviews current

position/status.

3. A shipping decision is made according to new orders and

backlog, subject to inventory availability,

4. An ordering decision is made for more beer.

Costs • Holding one case of beers per week costs you $0.5; if you have

24 cases at the end of period 9, then total cost = $12

• Backlogging one case per week costs you $1.0; if you have 45

shortage on book at the end of period 12, the total cost =$45

Backlogging/backorders occur when you do not have stock to ship the

required quant. by your customer in the current and/or earlier periods.

1. In period 16, you (retailer) ship 6 for demand of 12, then you have

backorders of 6.

2. In period 17, new demand of 10 comes, but you do not have any stock,

then you have cum. backorders of 16.

3. In period 18, you receive a shipment of 20 cases from W/H and another

new order of 8 cases, then your backorders = 16+8-20 =6: shipping out 20

• Make sure you ship when you have inventory!!!

Game

Login • Each student takes

on a different role.

http://www.pom.edu/

Things to Keep in Mind

• Cost – Inventory & Stockout

• Goal – Minimize Costs

• Delays

• No Communication within the Team

Bring up decision screen….

Playing the Game

• Two decisions each period – How much to

ship? How much to order?

• Must click on “Submit Button” to enter

decision.

• Must click for status update – after I

advance the game

Play a few rounds to get the hang of it…

Debrief

• What happened?

• Variance in Orders

• Inventory/Shortages – Feast or Famine

• What was the actual demand at the retailer?

• Enjoy!

•

1. It takes 2 periods to move an order of beer between two players.

• In period 3, Wholesales decides to ship 10 cases of beer to

Retailer, the beer would take periods 4 and 5 to move to

Retailer and then

• The 10 cases would be available for sale by Retailer at the

beginning of period 6.

2. Orders are not visible to the upstream player for 1 period. For

example, if the Wholesaler places an order in period 2, the order is

received by the Distributor at the beginning of period 3.

• Thus, it takes (at least) 4 periods to get order fulfilled.

Internet/Web-base

Beer Game

21

22

1. Transport

2. Inventory count

3. Order seen

4. Fulfill order

5. Place order

1 2

3

4 4 4

4

23

For each period of play, every participant follows the

same cycle:

1. The system is updated by your instructor where

new orders and shipments are received, shipments

enroute are advanced, and inventory levels and

backorder positions are calculated (these tasks are

done automatically by the server program.

2. The player updates the status screen and reviews

current position.

3. A shipping decision is made according to new

orders and backlog, subject to inventory

availability,

4. An ordering decision is made for more beer.

5. There are only two costs involved in this

simplified version of a logistics supply chain:

inventory holding cost ($1.00/case/period) and

back order costs ($2.00/case/period).

6. Each team has the goal of minimizing the sum of

these costs by balancing the cost of having

inventory (inventory holding cost) with the cost

of being out of inventory when a customer

orders beer (back order cost).

Action The game begins with a fully-loaded "pipeline" of

cases of beer:

• 16 cases of inventory in each position's "current inventory,"

• 4 cases in each of the "production delay" pipeline,

• 4 cases in each of the "shipping delay" pipeline,

• each position has an initial order for 4 cases of beer.

Definitions The following terms are used in the status report:

1. Current Demand - This is the demand for the current period at

this position (-location). For the Retailer, this demand is

determined by an external demand stream. For all other

positions, this demand reflects an order placed by the

downstream position in the supply chain during the previous

period.

2. Backorder - This is the demand that has not been met to date at

this position. When a position does not meet demand by

shipping cases of beer, the backorder amount is increased. This

amount does not include the demand during the current period.

1. Current Shipment - This is the amount that is being

shipped to the downstream position during the current

period.

2. On Hand - This is the current amount in inventory at the

position. This is the total amount that can be shipped

this period from this position.

3. Due Next Period - This is the number of units that are

scheduled to arrive at this position next period.

4. After the ordering and shipping decisions have been

made, the "status" button can be used to update the

status report. The status report will reflect the current

order and shipment decisions. Remember that after the

instructor has updated the system, the "status" button

should be pressed again to receive a report that reflects

the execution of the decisions for the previous period.

1. Due In Two Periods - This is the number of units that are scheduled

to arrive in two periods.

2. Current Order Release - This is the number of units that are being

ordered from the upstream position. The upstream position will not

see this order until after the system has been updated to the next

period.

3. Inventory Cost - This is the cumulative inventory cost for this

position. This is calculated from the actual inventory balance at the

end of each simulated period. During the update process, the system

first ships material to the downstream position, updates the

cumulative inventory and backorder costs based on the inventory

and backorder levels, and then receives new material into the

position.

4. Backorder Cost - This is the cumulative backorder cost for the

position.

5. Total Cost - This is the total cumulative cost for the position.

Each position can communicate orders via the Web form only. No

other form of communication is allowed between positions.

Instructor

Screen • 2-4 period practice

session.

• Play game for 30-35

periods.

• 30-45 seconds per

period.

Debrief

Graphs

• Entire game and

debrief can be

completed in one

75 minute class.