1. Chapter 7: Supplement
The Beer Game

2. The Beer Game Board and Initial Condition
Figure 7A.1

3. The Beer Game Supply chain consists of four stages
Factory
Wholesaler
Distributor
Retailer
Each stage is required to manage its inventory level through the placement of orders with its upstream supplier

4. Rules
There is a two-week delay between the retailer, wholesaler, and distributor
Production orders at the factory are available to ship three weeks after the production request
Objective is to minimize the sum of your total weekly costs
Only upstream communication are orders

5. Costs Weekly costs have two components
Inventory cost
Backlog cost
Weekly inventory cost is $0.50/keg of beer in inventory at end of week
Backlog cost is $1.00/keg on backlog at the end of the week

6. Initial Conditions
Demand at the retailer stage have been stable at four kegs per week
Every order in supply chain has been four kegs
Each stage has maintained an inventory of 12 kegs
Warmer weather is expected to raise demand
Upcoming promotions are also expected to raise demand

7. Playing the Game Will be assigned to one of the four stages
During play, will perform the five steps shown on the following slides
Must be completed in order shown
Each stage of supply chain must complete the tasks simultaneously
Only the final task requires a decision

8. Step 1

9. Step 2

10. Step 3

11. Top of Data Sheet
Figure 7SA.2

12. Steps 4–6