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