2. The beer game
The Beer Game is a representation of a production–
distribution system on four levels: Factory, Distributor,
Wholesaler and Retailer, see Fig. 1. The orders starting
from the customer go to the Retailer, then to the Wholesaler,
the Distributor, and finally reach the Factory. In the
meantime, deliveries are shipped from the Factory down
through the supply chain until they reach the customer.
TheBeer Game is widely used inmanagement schools as
a means of conveying to the students the causal relationships
between their decision-making and the behaviour of
supply chains. The game may also be considered as an
illustration of how oscillations can arise in economic and
managerial systems. Finally, the game illustrates how one
can use simulation models to fit different order policies.
The typical results of the game are counterintuitive, because
large oscillations appear in the order rate in response
to a step-increase in the customer demand [10].
In order to simplify this production–distribution system
to be used by real players, several rules and structural
characteristics were defined [7]: there is only one inventory
at each level initialized with 12 cases of beer; the time
delay for passing of orders and shipments from one stage
to the next is fixed to 1 week (one time period of the
game); the production time is taken to be 3weeks, and it is
assumed that the production capacity of the brewery can
be adjusted without limits. Moreover, orders placed cannot
be cancelled, surplus inventories cannot be returned,
and deliveries must be made if covered by the available
inventory. Each week customers order beer from the
retailer, who supplies the requested quantity out of his
inventory.
A further typical simplification is that customer
demand is four cases of beer per week until week 4 and
steps to eight cases of beer per week at week five. In this
work we have analysed a set of customer demands that
changes, at week five, from four to fifteen cases and then
we have forced the systemwith a higher demand, i.e. forty
cases, to test if the limit values found are maintained.
The objective for the participants (stock managers) in
the game is to minimise cumulative sector costs at the end
of the game. Considering the costs associated with inventory
holding (0.50 per case perweek), stocks should be kept
as small as possible. On the other hand, failure to deliver on
request may force customers to seek alternative suppliers.
For this reason, there are also costs associated with having
backlogs of unfilled orders (2.00 per case per week).
At the beginning of each week, stock managers in all
the sectors have to decide, the amount of beer to be
ordered from their suppliers.