Beer Game Essay

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The Beer Game is a role-playing simulation developed at MIT in the 1960's to clarify the advantages of taking an integrated approach to supply chain management. We have developed this computerized version of the Beer Game to make it easier to play the Beer Game as well as to illustrate certain Supply Chain Management issues which cannot be demonstrated by the traditional (non-computerized) Beer Game. This game is distributed with the textbook "Designing and Managing the Supply Chain" by D. Simchi-Levi, P. Kaminsky, and E. Simchi-Levi.

The Scenario

The Beer Game is a simulation, in which you, the player, are faced with the following scenario:

In this exercise, you will be faced with the following scenario:
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Delay 2 is 0 at this point.

Step 2. Orders from the immediate downstream facility (or in the case of the retailer, external customers) are filled to the extent possible. Remember that an order consists of the current order, and all accumulated backorders. Remaining orders (equal to current inventory minus the sum of the current orders and backorder) are backlogged, to be met as soon as possible. Except for retailers, which ship orders outside the system, the orders are filled to the Delay 2 location of the immediate downstream facility. This is the start of the two week delay.

Step 3. Inventory and backorder costs are calculated.

Step 4. Orders are placed. If this is the interactive role, the user indicates the desired order amount. If this is one of the automatic roles, the computer places an order using one of several typical inventory control schemes.

Delays and Order Filling: Note that this sequence of events implies several things. First, once an upstream facility fills an order, there is a two period delay before this material can be used to fill a downstream order. Also, there is a one period order delay. This means that if, for example, the retailer places an order for 5 units in this period, the wholesaler does not even attempt to fill the order until next period. This period, the wholesaler attempts to fill the order from the previous period. This can be considered a one period order processing lag.

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