Beer Game –

Supply Chain Simulation

Dr. CK Farn

2006 Spring

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Simulation Settings

Overly simplified supply chainSelling kegs of beer

RolesFactory (warehouse)

Distributor

Wholesaler

Retailer

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Supply Channels

Factory

Distributor

Wholesaler

Retailer

訂單

訂單

訂單

Factory

Distributor

Wholesaler

Retailer

訂單

訂單

訂單

Order

Order

Order

Order processingdelays

Transportdelays

From shop floor

To Consumers

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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 costsThe total cost that the four members incurred through the exercise

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Scenarios

1. lead time = 3 weeksOrder delay = 2, transport delay = 1

2. lead time = 1 weeksOrder delay = 1, transport delay = 0

3. lead time = 3 weeksVisibility– weekly POS data, downstream inventory level

4. lead time = 3 weeksKnown average weekly demand and demand pattern

5. lead time = 3 weeks4-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 weeksOrder delay = 1, transport delay = 0

Change of rolesR W

W D

D F

F R

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Round #3

lead time = 3 weeksOrder delay = 2, transport delay = 1

Visibility– weekly POS data, downstream inventory level

Change of roles againR WW DD FF R

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Round #4

lead time = 3 weeksOrder delay = 2, transport delay = 1

Average demand = 10Winter weeks 1-6; summer weeks 10-18; winter weeks 22-25 Change of roles again

R WW DD FF R

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Round #5

lead time = 3 weeksOrder delay = 2, transport delay = 1

Rolling forecast

Change of roles againR WW DD FF R

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Rolling forecastW# 1 2 3 4 5 6 7 8 9 10 11 12

1

2

3

4

5

6

7

8

9

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Rolling forecast 2W# 10 11 12 13 14 15 16 17 18 19 20 21

10

11

12

13

14

14

16

17

18

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Rolling forecast 3W# 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?