Beer Game

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I didn’t research the Beer Game itself prior to the game being played. I did read the summary provided of the game, but if I had done a little research on the web prior to the game, I would have had quite a bit of insight. It seems this game is very well known and used quite often in schools and management training to show the supply chain in action. The game has been around since the 1960’s when a group from MIT’s Sloan School of Management introduced the game as a part of a research project. The game was originally named the production-distribution game and is continued to be known as this but has been coined the Beer Game (Sterman,1992).

The game has four players per team; Retailer, Wholesaler, Distributor, and Factory. The
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The demand remained relatively consistent with slight fluctuations within the game. So the game truly brings a focus, the reaction of the supply chain to small market fluctuations. However, if the focus of the game was inventory, I felt that one of the key costs of inventory was ignored in the game, that being ordering costs. We tracked shortages, ordering, and backlogs but we only focused on holding costs and shortage costs when it came to tracking team costs. We did not have costs associated to orders calculated into the system and in most cases each player ordered each cycle.

I am a little unsure why the element of ordering costs would have been left out of the equation except for the added variability to inventory it would cause. But since it was left out of the game, the inventory was allowed to be kept lower than if ordering costs remained in the game. Since there were no ordering costs, inventory was ordered on almost every cycle within the supply chain. Reaction of inventory fluctuations within the system or the bullwhip effect is another focus of what the game teaches. If ordering costs were in play it may distort the effect. With no ordering costs the bullwhip effect is evident.
The bullwhip effect shows that decisions made by groups along the supply actually worsen shortages and overstocks. It was interesting later to learn that in a structured supply chain, when a participant tries to amplify the profit at the

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