Lean beer game

Sterman Karlqvist Eds. Boston:CRC Press. Radzicki, M. Computer-based beer game boards. Worcester Polytechnic Institute, Dept. Thomsen, J. Hyperchaotic Phenomena in Dynamic Decision Making. Systems Analysis and Modelling Simulation, forthcoming. Roberts, E. Cambridge, MA: Productivity Press. Senge, P. New York: Doubleday. Sterman, J. Instructions for Running the Beer Distribution Game. Management Science , 35 3 , You must be logged in to post a comment. The Beer Distribution Game. By John Sterman.

Play with Legos. Causes of the Bullwhip Effect Retailers may misinterpret a small increase in customer purchases as an indication of future demand. Promotions and Discounts increase purchases temporarily and this sends a wrong signal to the distributors and manufacturers that the consumption has increased.

Order batching is the consolidation of orders into one main order that is sent to the distributor once every month or every two weeks. This infrequent ordering creates spikes in the supply chain that are sometimes misread to mean there is an increase in consumption. Pushing of orders by sales people, by giving temporary incentives so that they can meet their quarterly targets, causes excess supply at the end of the quarter.

Introduction of new products in the market creates a sharp increase in orders from the retailers and distributors. This distorts the actual demand for the product which leads the manufacturer to produce even more.

After the initial excitement of the product launch dies down, a large stock of unsold goods remains at various sections of the supply chain because the real customer demand is much lower than what was produced.

Bullwhip Effect Explained. The Beer Game. The Beer Game This is a famous game that is used in universities and companies to explain the bullwhip effect.

By understanding the supply chain as a complete system, the players learn: how individual components of a supply chain affect each other why sub-optimization does not yield the best results optimization of the system as a whole the role of Information Communication Technology ICT. Setting up the Beer Game There are four stages that represent a typical supply chain: Retailer— usually given the colour pink, this is the point of contact with the final customer.

Playing the Beer Distribution Game The Beer Game is played by groups of three people who sit around a table that represents any of the four stages of the supply chain. Each table is laid out in the following manner: Order Inbox that comes from the preceding stage Order Outbox that goes to the subsequent stage Receiving Area that comes from the preceding stage Dispatch Area that goes to the subsequent stage There is a delivery and production lead time of two weeks each which is represented by placing two small placeholders in between the supply chain stages.

Beer Game Rules Beer Game is played over several weeks where on each a group plays by following the sequence listed below: Delivery receipt Order receipt Shipping quantity calculation New order consensus The main aim of the game is to minimize costs, of which there are two types: Inventory costs Backorder costs Backorders occur when an order cannot be fulfilled, in which they are forwarded to the following week. More rules: Supply chain groups are not supposed to talk to each other.

The real customer demand is known only to the retailer. They can better understand certain behaviors and tendencies of employees at each stage in order to more effectively identify and address planning problems. Among those notions, of course, the bullwhip effect, is crucial to understand. This term refers to demand swings increasing when going upstream from the consumer to the manufacturers and suppliers. One effective way to illustrate the importance of increased visibility throughout the supply chain is to play two different sessions — one with less transparent settings that reveal issues stemming from blind spots between stages and another game with information-sharing settings turned on — and then compare the end results of both.

In the latter game, players can more easily communicate and share their points of view, which allows teams to better collaborate and formulate a plan in advance or more effectively react to sudden changes or events affecting certain stages of the chain. In nearly every Beer Game session, due to various settings lead times, visibility, etc. These types of behavior have been historically examined in the field of System Dynamics, popularized by the beer distribution game inventor Jay Forrester, and organizations are constantly trying to figure out solutions.

The Beer Game aims to help managers improve the way the system is set up in the first place through supply chain design and processes.