The Root Beer Game zSimulates the operation of a simple supply chain zIllustrates important systems principles zDeveloped at MIT in the 1960s

Playing the Root Beer Game zIntroduction xThe 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. zObjective xThe objective of the game is to satisfy the requirements of your immediate customer in the best possible way! zRoles Customers <> Retailer <> Distributor <> Brewery

Rules of the Game zThe supply chain partners’ only communication is by reading and writing down numbers on color coded sheets of paper yBlue Sheet xPlace an order xRead Demand yPink Sheet xShip to fill order xReceive filled order zAll moves, inventories and backlogs are recorded on scorecards

Playing the Game zEach player has a starting inventory of 12 barrels zOne turn = One week of business activity zEach “turn” in the game has 4 major steps 1. Read this week’s demand from your customer 2. Ship Root Beer to your customer in response to (1) 3. Take receipt of Root Beer from your supplier 4. 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) zRead Demand that your customer placed at the end of previous week zRecord the Demand zDiscard the blue piece of paper

Step 2a: Ship Product From Inventory (Tuesday) zDecide how much to ship to your customer in response to last week’s demand zRecord how much you’ll ship zWrite amount on pink sheet of paper and place it face down for your customer to pick up

Step 2b. Calculate Backlogs zBacklog = Orders that you received but did not fill zBacklog is cumulative New Backlog = Old Backlog + (Demand from Step 1 - Amount Shipped in Step 2a)

Step 3a. Receive Product from Supplier (Wednesday) zTurn the pink piece of paper from your supplier in response to last week’s order zRecord how much was received zDiscard 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 zNew Inventory = Inventory of start of week - Amount Shipped in Step 2a + Receipts from Step 3a.

Step 4. Place New Order with Supplier (Thursday) zDecide how much to order for next week zRecord how much you’ll order zWrite the amount on the blue sheet of paper and place it face down zWait for another week

News Flash zIn a highly anticipated interview with Barbara Walters, Monica Lewinsky acknowledged that she did consume Panther’s Root Beer on certain occasions...

Important Rules zFollow the sequence, don’t jump ahead zOn step 2a, you can ship as much as you want (as much as you have in inventory!) zYou can not have negative inventories at any time! zYou must accept all deliveries (No returns!!)

Your Cost Structure zInventory Carrying Cost is $1 per barrel per week zCost of a Backlog is $2 per barrel per week

Summary 1. Receive Demand 2a. Make Shipment Decision 2b. Calculate Backlog 3a. Receive Product 3b. Calculate New Inventory 4. Make Ordering Decision Update Scorecard

Scorecard (Retailer)

Scorecard (Wholesaler)

Scorecard (Brewery)