The Root Beer Game
Simulates the operation of a simple supply
chain
Illustrates important systems principles
Developed at MIT in the 1960s
Playing the Root Beer Game
Introduction
 The goal in this simulation game is to distribute root beer to customers in a manner to
satisfy the customer and earn the most profits for your business. Each of you will play
the role of a manager of key distribution aspects of Panther’s Root Beer Corp.
Objective
 The objective of the game is to satisfy the requirements of your immediate customer in
the best possible way!
Roles
Customers <> Retailer <> Distributor <> Brewery
Rules of the Game
 The supply chain partners’ only communication is by
reading and writing down numbers on color coded
sheets of paper
Blue Sheet
Place an order
Read Demand
Pink Sheet
Ship to fill order
Receive filled order
 All moves, inventories and backlogs are recorded on
scorecards
Playing the Game
 Each player has a starting inventory of 12 barrels
 One turn = One week of business activity
 Each “turn” in the game has 4 major steps
1. Read this week’s demand from your customer
2. Ship Root Beer to your customer in response to (1)
3. Take receipt of Root Beer from your supplier
4. Place an order with your supplier for more Root Beer
* Note that this week’s receipt is in response to your last week’s order
Step 1: Read Demand to begin
new week (Monday)
Read Demand that your customer placed
at the end of previous week
Record the Demand
Discard the blue piece of paper
Step 2a: Ship Product From
Inventory (Tuesday)
Decide how much to ship to your
customer in response to last week’s
demand
Record how much you’ll ship
Write amount on pink sheet of paper and
place it face down for your customer to
pick up
Step 2b. Calculate Backlogs
Backlog = Orders that you received but
did not fill
Backlog is cumulative
New Backlog = Old Backlog + (Demand from Step 1 Amount Shipped in Step 2a)
Step 3a. Receive Product from
Supplier (Wednesday)
Turn the pink piece of paper from your
supplier in response to last week’s order
Record how much was received
Discard the pink sheet of paper
*
Brewery can brew any amount of Beer; but requires 2
weeks to brew any planned amount
Step 3b. Update Inventory
New Inventory = Inventory of start of week
- Amount Shipped in Step 2a
+ Receipts from Step 3a.
Step 4. Place New Order with
Supplier (Thursday)
Decide how much to order for next week
Record how much you’ll order
Write the amount on the blue sheet of
paper and place it face down
Wait for another week
News Flash
In a highly anticipated interview with
Barbara Walters, Monica Lewinsky
acknowledged that she did consume
Panther’s Root Beer on certain
occasions...
Important Rules
Follow the sequence, don’t jump ahead
On step 2a, you can ship as much as you
want (as much as you have in inventory!)
You can not have negative inventories at
any time!
You must accept all deliveries (No
returns!!)
Your Cost Structure
Inventory Carrying Cost is $1 per barrel
per week
Cost of a Backlog is $2 per barrel per
week
Summary
1. Receive Demand
2a. Make Shipment Decision
2b. Calculate Backlog
3a. Receive Product
3b. Calculate New Inventory
4. Make Ordering Decision
Update Scorecard
Scorecard (Retailer)
Step 1 Step 2a Step 2b Step 3a Step 3b Step 3c Step 4
Starting
Ending Average
Week InventoryDemand Ship Backlog ReceiptInventory
Inventory Order
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
12
12
11
11
4
5
5
5
4
5
5
0
0
0
0
4
4
5
12
11
11
12
11.5
11
4
5
5
Cost
$ 12.00
$ 11.50
$ 11.00
Scorecard (Wholesaler)
Step 1 Step 2a Step 2b Step 3a Step 3b Step 3c Step 4
Starting
Ending Average
Week InventoryDemand Ship Backlog Receipt InventoryInventory Order
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
12
12
11
4
5
4
5
0
0
0
4
4
12
11
12
11.5
4
5
Cost
$ 12.00
$ 11.50
Scorecard (Brewery)
Step 1 Step 2a Step 2b Step 3a Step 3b Step 3c Step 4
Starting
Ending Average
Week InventoryDemand Ship Backlog ReceiptInventory
Inventory Order
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
12
11
5
5
0
0
4
11
11.5
5
Cost
$ 11.50