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!
RolesCustomers <> 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 customer2. Ship Root Beer to your customer in response to (1)3. Take receipt of Root Beer from your supplier4. 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 DemandDiscard 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 shipWrite 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 receivedDiscard 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 orderWrite the amount on the blue sheet
of paper and place it face downWait 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 aheadOn 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 $2 per barrel per week
Summary
1. Receive Demand2a. Make Shipment Decision2b. Calculate Backlog3a. Receive Product3b. Calculate New Inventory4. Make Ordering Decision
Update Scorecard
Scorecard (Retailer)Step 1 Step 2a Step 2b Step 3a Step 3b Step 3c Step 4
Starting Ending Average Week InventoryDemand Ship Backlog ReceiptInventoryInventory Order Cost
1 12 4 4 0 4 12 12 4 12.00$ 2 12 5 5 0 4 11 11.5 5 11.50$ 3 11 5 5 0 5 11 11 5 11.00$ 4 11 5 0567891011121314151617181920
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 Cost
2 12 4 4 0 4 12 12 4 12.00$ 3 12 5 5 0 4 11 11.5 5 11.50$ 4 11 056789101112131415161718192021
Scorecard (Brewery)Step 1 Step 2a Step 2b Step 3a Step 3b Step 3c Step 4
Starting Ending Average Week InventoryDemand Ship Backlog ReceiptInventoryInventory Order Cost
3 12 5 5 0 4 11 11.5 5 11.50$ 4 11 056789101112131415161718192021