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1/18/2017The Beer GameDr. Josué C. Velázquez MartínezDirector, SCALE Latin comJanuary 17, 2017MIT Center for Transportation & LogisticsCambridge, MAThe Beer Game The Beer Game wasdeveloped here at MIT 1960s by Jay Forrester inSloan System DynamicsGroup and study ofindustrial dynamics Played by 1,000s aroundthe world, reflects many ofthe dynamics of supplychains But there is no beer 1
1/18/2017Take your positionsInformationFlow (Slips)MaterialFlow (Chips)Each entity of the SC (retailer, wholesaler, etc.) should haveone laptop with the ‘2017 Record’ Excel file openDownload it frommcmxvi.com/beer.zip2
1/18/2017Let’s start Agree with your table on aname for your team. It canbe anything you want. Open the spreadsheet frombeer.zip, and go to the sheet‘Who am I’ Complete the fields teamname and your position inthe team’s supply chain. Save the file with a newname: Team‐Position.xlsxNote: Use “Save as”Let’s take a look at the boardEmpty44pad44pad444padDeckpad Wholesaler Distributor Retailer Factory3
1/18/2017Chips & SlipsDECKA deck of cards with the demand of the final consumer.Only the Retailer sees the card, and tells nobody! Chips are beer cases: small chip 1 case, big chip 5 casesPost‐its are for each position to write/place orders:4444‐ Retailers order cases using the yellow post‐its‐ Wholesalers order cases using the blue post‐its‐ Distributors order cases using the green post‐its‐ Factory orders production using the red post‐itsThe mechanicsEverything Moves Clockwise!Orders Soldto ShippingDelayShippingDelayShippingDelayChips (beer) moves from Factory to CustomerSlips (orders) move from Customer to Factory4
1/18/2017“Building the plane while flying it ”Let’s first see the instructions An easy recipe for troubleIf you want to make thingsharder for your team and createa lot of confusion, all you haveto do is to: get ahead of the pack, or fall behind Nothing screws things up fasterthan a person playing the gameat his/her own pace.Our advice: keep the pace andfollow the lead of the facilitator5
1/18/2017Let’s play 1. Advance products in the pipelineUSE the advanced Miyagi technique“Two‐hand CTL slide” Wholesaler Distributor Retailer FactoryLet’s play 1. Advance products in the pipelineUSE the advanced Miyagi technique“Two‐hand CTL slide” Wholesaler Distributor Retailer Factory6
1/18/20172. Check the order you have received from yourcustomer4444RetailerWholesaler DistributorFactoryRecord the order you received in cell K447
1/18/20173. Read in cell P4 the number of cases you have toship4Ship these cases to your customer4444 Wholesaler Distributor Retailer Factory8
1/18/20174. Count how many chips you have in your inventorybox Retailer Wholesaler Distributor FactoryIf the physical inventory is different from thecalculated inventory, then enter the physical value incell R4129
1/18/20175. Count how many cases you will receive from yoursupplier next weekWholesaler Distributor Retailer FactoryRecord this number in cell W4410
1/18/20176. Make an educated guess of the final consumerdemand. Record it in cell W44Make it fast and natural.Take 5‐10 seconds for this step7. Retailer, Wholesaler and Distributor advance theirorder slips. Factory brews (i.e. put chips in box.)4 RetailerWholesaler DistributorFactory11
1/18/20178. Place an order for your supplier in a post‐it note.Note: Order 4 this time4444RetailerWholesaler DistributorFactoryRecord your order in cell Y4412
1/18/2017UsedAt the end of week 1, the board shouldlook exactly as it was at the startEmpty4444padpad444DeckpadWholesaler Distributor Retailer padFactory and your Excel sheet shouldlook like this one below:Let’s reinforce by doing Week 2!A bit faster this time!13
1/18/2017Objective of the Beer GameTeams compete against each other. The team with the lowestoverall cost wins the game. We will run the game for 52 weeks.The overall cost of a team is the sum of the costs of the fourentities of the SC of that team.The cost of each entity is the sum of the inventory holding cost( 0.50/case/week), backlog cost ( 1/case/week), and lostinventory cost ( 24/case).Some things to keep in mind You don’t know future demandYou will get what you order,No order cancellations, no expeditingRetailers – do not reveal your customer order deckYou can only speak with the fellow in front of you. Youcannot speak with those right or left. There is nocollaboration across positions! PLEASE DON’T WRITE ON THE GAME BOARD! From Week 5 and forward, you decide what to order. Youonly have 5‐10 seconds stay focused!14
1/18/2017An easy recipe for troubleIf you want to make thingsharder for your team and createa lot of confusion, all you haveto do is to: get ahead of the pack, or fall behind Nothing screws things up fasterthan a person playing the gameat his/her own pace.Our advice: keep the pace andfollow the lead of the facilitatorRemember .The Beer Game is Just a Game, soenjoy it! 15
The cost of each entity is the sum of the inventory holding cost ( 0.50/case/week), backlog cost ( 1/case/week),and lost inventory cost ( 24/case). Some things to keep in mind You don’t know future demand You will get what you order, No order cancellations, no expediting
