The Beer Distribution Game
(Channel Coordination Simulation)
This exercise was developed by Forrester at MIT to study industry dynamics during the 1960s. The exercise is now being played in most major business schools as supply chain management has become an important strategic issue for business to stay competitive. The exercise allows you to experience first hand the flow of materials through a supply chain, see its mechanics, and appreciate some important phenomena ...view middle of the document...
Collusion (i.e. talking) among team members is strictly prohibited during the game.
The four members of each team will play the roles of the Retailer, Wholesaler, Distributor and Manufacturer in a supply chain. Each member is responsible for making his/her own ordering decision. The system will keep tab of inventory and ordering information as the game progresses. Obviously, your ordering decision will affect your inventory and stockout costs, and therefore the overall performance of your team. Assume that this is a new product, so you don’t any reliable historic record to forecast your demand at the start of the game.
The cost parameters are as follows. Any unmet orders at all four players are backlogged (i.e. no lost sales). The inventory holding costs are $1 per crate in current inventory. The stockout cost is $2 per crate in backlog. These costs will be charged at the end of each time period based on your inventory and backlog levels. All teams play against each other, and the team that has the lowest total cost will win.
Hope you will have a fun learning experience!
To participate, you need to bring laptop to class.