The Distribution Game
Beer Distribution Game

Supply chain members





Brewery (Manufacturer)
Distributor
Wholesaler
Retailer
Goal : Meet end customer demand at
minimum cost
(Inventory cost and Backorder cost)
Beer Distribution Game
Upstream Orders
Raw Materials
Brewery
Distributor
Wholesaler
Retailer
(Manufacturer)
Downstream Shipment
Customer
Order and Shipping Delays
Order
Delay
Retailer
Ship
Delay
Order
Delay
Ship
Delay
Wholesaler
Manufacturing (Brewing) Delays
Production
Order Delay
Brewery
/Factory
Ship
Delay
Raw Materials
Rules

Objective : Meet end customer demand at
minimum cost





Inventory cost at every echelon
Backorder cost only when the end customer is not
satisfied in time (i.e. every SC member is charged when
retailer goes into backorder)
Every player operates independently, especially the
retailer should not reveal the customer order to
other supply chain members
Shipment quantity cannot exceed the sum of
echelon demand and backorder
No information sharing
Beer Distribution Game
Game Initialization
End customer demand is uniformly
distributed between 0 and 8


What is uniform distribution?
Inventory System

•
•
•
Place an order at the end of each time period
Each facility begins with 12 cases of inventory.
Replenishment lead time is 4 periods except for
factory (2 periods).
Example demand pattern
8
7
6
Demand
5
4
3
2
1
0
1
6
11
16
Weeks
21
26
Example demand pattern
9
8
7
Demand
6
5
4
3
2
1
0
1
6
11
16
Weeks
21
26
Beer Distribution Game
Game Initialization
End customer demand is uniformly
distributed between 0 and 8


What is uniform distribution?
Inventory System

•
•
•
Place an order at the end of each time period
Each facility begins with 12 cases of inventory.
Replenishment lead time is 4 periods except for
factory (2 periods).
Week 1 scenario
4
4
Wk 1 order : 10
Retailer
12 cases
Wholesaler
4
4
12 cases
Week 2 scenario
Wk 1 order : 10
10
Retailer
12 cases
4
Wholesaler
4
4
12 cases
Week 3 scenario
XX
Retailer
12 cases
10
Wk 1 order : 10
Wholesaler receives
and tries to fulfill
Wholesaler
4
4
12 cases
Week 4 scenario
YY
Retailer
12 cases
XX
Wholesaler
4
10
2 cases
Wk 1 order : 10
Wholesaler shipment –
Hopefully 10 units
Week 5 scenario
ZZ
Retailer
12 cases
YY
Wholesaler
10
Wk 1 order : 10
shipment arrives
XX
2 cases
Beer distribution game’s supply chain
Upstream – Order
Information
1 week
1 week
2 weeks
2 weeks
Distributor
Manufacturer
2 weeks
2 weeks
Wholesaler
2 weeks
Downstream Shipment
Retailer
2 weeks
Every week
Receive Shipment from
upstream member
Demand from
downstream member
SC Member
Ending inventory/backorder
What should be
the size of the order
you place to the upstream
member?
Send Shipment to
downstream member
Beer Distribution Game
Order of Events
Automatic in this
new version
1. Receive inbound shipments
2. Receive new order from downstream
player/customer.
3. Fill and ship order / increase
backorder.
4. Record inventory / backorder status.
5.Place a new order
Inventory Position vs. On Hand
Inventory

On Hand Inventory is what is left in stock at your echelon



If it is positive – you have inventory on hand
If it is negative – you have a backorder
Inventory position accounts for both on hand and on order
(outstanding orders that is not yet received)



Inventory Position = On Hand + On Order
If the lead time is 4 weeks, at any point of time you have at least
3 outstanding orders (orders to arrive in the next 3 weeks).
If the lead time is 2 weeks (Factory), at any point of time you
have at least 1 outstanding order (orders to arrive next week)
Cost calculation

Cost :



Inventory : $0.50/case/period
backorder : $1.00/case/period (for retailer’s backorder)
Total echelon (SC member) cost:
= Sum of all inventory cost over all periods + Sum of
backorder cost at the retailer

Total supply chain cost*:
= Sum of all echelon costs
* So every supply chain member is penalized when a
retailer stockouts!
What is your incentive?
• Participation credit is 4 points per SC member
Game g
Final cumulative
supply chain cost
Participation
points per player
SC1
$5,000
4
SC2
$10,000
4
SC3
$2,500
4
SC4
$20,000
4
Bonus points per
player
Beer Distribution Game
Let’s Get
Started!
http://scgames.bauer.uh.edu/beergame/v2/login.asp
Complete the questionnaire




Choose your time slot
Enter your game number, position
Select your name
Answer the questions to the best of
your ability (max 5 minutes)
Supply Chain page
Channel member screen
Input
screen
Order/Shipment/Cost
History
Status of the
supply chain
Plots and
details of your
position
Input Screen
Channel member screen
Input
screen
Order/Shipment/Cost
History
Status of the
supply chain
Plots and
details of your
position
Order History
Order History
Channel member screen
Input
screen
Order/Shipment/Cost
History
Status of the
supply chain
Plots and
details of your
position
Plot details
Channel member screen
Input
screen
Order/Shipment/Cost
History
Status of the
supply chain
Plots and
details of your
position
Status of supply chain