1. The Beer Game  Simulates the flow of beer through a simple supply chain—retailer, wholesaler, distributor, manufacturer  Each participant: o forecasts beer demand o orders beer or schedules production (for mfg.) o tries to minimize inventory and back-order costs  Use a Table to play game in class

2. The Beer Game (continued) Directions for play: Starting play – split up into groups of 4, and decide who plays each company (retailer, wholesaler, distributor, mfg.). Sit in order. Each player should have the Table A1.2 – the retailer should have a stack of post-it notes with incoming customer demand (don’t look, and no talking!). Each player has an outgoing order of 4 cases to start. Each member ships their beer – move cases from 2 nd week delay to Beginning Inventory, move cases from 1 st week delay to 2 nd week. Get customer orders – 1) retailer: read customer demand slip, place in discard pile, fill order from inventory (record backorders if can’t fill order), record ending inventory, send last week’s outgoing order to wholesaler’s incoming demand box, forecast demand for next week and place in outgoing order box. 2) Wholesaler follows same steps, except when filling order, place number in retailer’s Beginning 1 st Week Delay, update inventories/backorders, send last week’s outgoing order to distributor, forecast demand, make order for next week.

3. The Beer Game (continued) 3) Distributor follows same steps as wholesaler; 4) manufacturer also follows same steps except instead, it reads last week’s order and fills from production (it creates the cases needed and places in 1 st week delay). Note about backorders– existing backorders must be filled prior to filling any incoming demand. Thus, add backorders to incoming demand, and subtract from inventory. If not enough inventory exists, the remainder is carried as another backorder, and ending inventory must equal zero. At the end of the game (20 weeks)—sum all ending inventories (times 1$) and all backorders (times 2$). NO TALKING!!