1. supply chain: the beer essentials
overview
four roles: retailer, wholesaler, distributor, and producer.
each week orders are submitted upstream.
retailer to wholesaler, wholesaler to distributor, …
orders take one week between firms
each week shipments are delivered downstream.
producer to distributor, distributor to wholesaler, ...
shipments take either one or two weeks between firms
goal is to minimize costs
Carry cost: end of each day penalized for each unit held in inventory.
Backlog cost: end of each day penalized for each order you could not fulfill
beer game
9A Playground for Decisions 9

2. your game screen click truck to accept new shipment 9 beer game
9A Playground for Decisions 9

3. your game screen click to add shipment to inventory 9 beer game
9A Playground for Decisions 9

4. your game screen inventory updates. click to read orders. 9 beer game
9A Playground for Decisions 9

5. your game screen
orders update. click to fulfill orders out of inventory
beer game
9A Playground for Decisions 9

6. your game screen use slider to choose how much to order. 9 beer game
9A Playground for Decisions 9

7. your game screen place order 9 beer game www.moblab.com
9A Playground for Decisions 9

8. your game screen click magnifying glass to get important information 9
beer game
9A Playground for Decisions 9

9. your game screen orders flow upstream. shipments flow downstream 9
beer game
9A Playground for Decisions 9

10. your game screen backlog cost. carry cost 9 beer game www.moblab.com
9A Playground for Decisions 9

11. your game screen click the magnifying glass to return 9 beer game
9A Playground for Decisions 9

12. your game screen click history tab for information on your order ETA 9
beer game
9A Playground for Decisions 9

13. payoffs objective=efficiency Goal: minimize cost
Balance: If you increase (decrease) inventory you reduce (increase) risk of incurring backlog cost but increase (decrease) carry cost.
(Cases Moved x 100 x max{carry,backlog})/Total Cost
payoff =
cases moved x
100
max{carry,backlog} ÷
Total cost
beer game
9A Playground for Decisions 9

14. payoffs an example You moved 100 cases
You incurred carry costs of $100 and backlog costs of $0
You incurred a total cost of $100
payoff =
cases moved x
100
max{carry,backlog} ÷
Total cost
beer game
9A Playground for Decisions 9

15. happy playing! payoffs an example You moved 100 cases
You incurred carry costs of $100 and backlog costs of $0
You incurred a total cost of $100
payoff =
cases moved x
100
max{carry,backlog} ÷
Total cost
10,000
beer game
9A Playground for Decisions 9