THE BEER GAME

1
THE BEER GAME
2
THE BOARD
3
START-UP

1. Pick a name for your teams beer.

1. Decide which team members will play the positions
   of Retailer, Wholesaler, Distributor, and Factory.

1. Write on your Recording Form the name of your
   team and your position.

• Everyone contributes CHF 2 to the pot.
• Winning team takes all!

4
START-UP (continued)

• The object of the game is to minimize the teams
  total costs. At the end of each week, costs are
  incurred in the following two ways
• For each case of beer in inventory, there is a
  carrying cost of 1.
• For each case of backlogged beer, there is a
  stock-out cost of 2.

5
START-UP (continued)

1. No communication is permitted between the
   Retailer, Wholesaler, Distributor, and Factory.

1. During each week, the Retailer is the only one to
   see the customers actual demand. The Retailer
   is prohibited from telling the demand to the
   Wholesaler, Distributor, and Factory.

1. The game will continue week-by-week for 50 weeks.

6
STEPS OF THE BEER GAME
STEP 1 Advance Delays and receive Inventory.
Advance the beer in the two Delays to your right,
adding incoming beer (if any) to your Inventory.
STEP 2 Look at Incoming Order, and fill
Backlog Order. Look at the Incoming Order
and, to the extent possible, fill the Backlog
first and then the Incoming Order.
STEP 3 Record Inventory or Backlog. On your
form, record new Inventory or Backlog.
STEP 4 Advance Order Slips, and Factory brew
beer. Retailer Place Incoming Order Card
face-down in the pile of Used Order
Cards. Wholesaler Distributor Discard the
Incoming Order Slip and advance your successors
Order Placed Slip to your Incoming
Order. Factory Discard the Incoming Order Slip
and advance your successors Order Placed Slip to
your Incoming Order. Also, brew new beer by
placing the quantity on the Production Order Slip
into the right-most Production Delay, and then
discard the Slip.
STEP 5 Place and record your Order. Retailer,
Wholesaler, Distributor Write your next order
on a new Order Placed Slip, place it face-down in
the Order Placed Box, and record the quantity on
your form. Factory Write your next order on a
new Production Order Slip, place it face-down in
the Production Order Box, and record the quantity
on your form.
7
Step 2 Example 1

• STEP 2 Look at Incoming Order, and
• fill Backlog Order.
• (Orders to Fill) (Current Backlog) (Incoming
  Order)
• If (Current Inventory) gt (Orders to Fill), then
• (Quantity Shipped) (Orders to Fill)
• (New Inventory) (Old Inventory) - (Quantity
  Shipped)
• (New Backlog) 0
• If (Current Inventory) lt (Orders to Fill), then
• (Quantity Shipped) (Current Inventory)
• (New Inventory) 0
• (New Backlog) (Orders to Fill) - (Quantity
  Shipped)

8
Step 2 Example 2

• STEP 2 Look at Incoming Order, and
• fill Backlog Order.
• (Orders to Fill) (Current Backlog) (Incoming
  Order)
• If (Current Inventory) gt (Orders to Fill), then
• (Quantity Shipped) (Orders to Fill)
• (New Inventory) (Old Inventory) - (Quantity
  Shipped)
• (New Backlog) 0
• If (Current Inventory) lt (Orders to Fill), then
• (Quantity Shipped) (Current Inventory)
• (New Inventory) 0
• (New Backlog) (Orders to Fill) - (Quantity
  Shipped)

9
Step 2 Example 3

• STEP 2 Look at Incoming Order, and
• fill Backlog Order.
• (Orders to Fill) (Current Backlog) (Incoming
  Order)
• If (Current Inventory) gt (Orders to Fill), then
• (Quantity Shipped) (Orders to Fill)
• (New Inventory) (Old Inventory) - (Quantity
  Shipped)
• (New Backlog) 0
• If (Current Inventory) lt (Orders to Fill), then
• (Quantity Shipped) (Current Inventory)
• (New Inventory) 0
• (New Backlog) (Orders to Fill) - (Quantity
  Shipped)

10
Step 2 Example 4

• STEP 2 Look at Incoming Order, and
• fill Backlog Order.
• (Orders to Fill) (Current Backlog) (Incoming
  Order)
• If (Current Inventory) gt (Orders to Fill), then
• (Quantity Shipped) (Orders to Fill)
• (New Inventory) (Old Inventory) - (Quantity
  Shipped)
• (New Backlog) 0
• If (Current Inventory) lt (Orders to Fill), then
• (Quantity Shipped) (Current Inventory)
• (New Inventory) 0
• (New Backlog) (Orders to Fill) - (Quantity
  Shipped)

11
YOUR GUESS OFWEEK-BY-WEEK DEMAND
Graph your guess of the customers week-by-week
demand.
12
ACTUAL WEEK-BY-WEEK DEMAND