Beer Game –
Supply Chain Simulation
Dr. CK Farn
2006 Spring
Simulation Settings
Overly simplified supply chain
Selling kegs of beer
Roles
Factory (warehouse)
Distributor
Wholesaler
Retailer
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Supply Channels
From
shop floor
Transport
delays
Factory
訂單
Order
Distributor
Order
訂單
Order
processing
delays
Wholesaler
訂單
Order
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Retailer
To
3
Consumers
Retailer
Order beer from wholesaler
Manages inventory levels
Sells/ships beer to fill end-consumer’s
orders
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Wholesaler
Order beer from distributor
Manages inventory levels
Sells/ships beer to fill retailer’s orders
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Distributor
Order beer from factory warehouse
Manages inventory levels
Sells/ships beer to fill wholesaler’s orders
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Factory
Schedule beer production in factory
Manages finished goods inventory levels
Sells/ships beer to fill distributor’s orders
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Leadtimes
Order processing delay
Transportation delay
Unit cycle time: one week
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Cost structure
Inventory holding cost:
$1 for each keg of beer in the inventory at the
end of each week
Lost of sales cost
$2 for each keg of beer that is backlogged at
the end of each week
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What you should do every week
Receive beer from upstream supplier
Receive order from downstream customer
Ship the beer to fill the demand as much as
possible, as inventory permit
Backlogged orders must be filled in
subsequent week, as inventory permit
Send an order to your upstream supplier
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Objectives
Minimize total channel costs
The total cost that the four members incurred
through the exercise
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Scenarios
1. lead time = 3 weeks
Order delay = 2, transport delay = 1
2. lead time = 1 weeks
Order delay = 1, transport delay = 0
3. lead time = 3 weeks
Visibility– weekly POS data, downstream inventory level
4. lead time = 3 weeks
Known average weekly demand and demand pattern
5. lead time = 3 weeks
4-week Rolling forecast available, 90% accurate
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Beer Game Site
http://203.68.134.3/~ckfarn/BeerGame/
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Round #2
lead time = 1 weeks
Order delay = 1, transport delay = 0
Change of roles
RW
WD
DF
FR
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Round #3
lead time = 3 weeks
Order delay = 2, transport delay = 1
Visibility– weekly POS data, downstream
inventory level
Change of roles again
RW
WD
DF
FR
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Round #4
lead time = 3 weeks
Order delay = 2, transport delay = 1
Average demand = 10
Winter weeks 1-6; summer weeks 10-18; winter
weeks 22-25
Change of roles again
RW
WD
DF
FR
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Round #5
lead time = 3 weeks
Order delay = 2, transport delay = 1
Rolling forecast
Change of roles again
RW
WD
DF
FR
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Rolling forecast
W#
1
2
3
4
5
6
7
8
9
1
2
3
4
5
6
7
8
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10
11
12
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Rolling forecast 2
W#
10
11
12
13
14
14
16
17
18
10 11 12 13 14 15 16 17 18 19 20 21
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Rolling forecast 3
W#
19 20 21 22 23 24 25 26 27 28 29 30
19
20
21
22
23
24
25
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Case preparation
Case 1: Prepare an analysis of the usage of the
concepts you learnt through the Beer Game.
a. What went wrong? How can the performance
be improved?
b. What are the important factors affecting supply
chain performance?
c. How can IT help in improving supply chain
performance?
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