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posted by martyb on Sunday December 03 2017, @05:45AM   Printer-friendly
from the business-is-more-difficult-than-it-looks dept.

[Ed note: I was debating on whether or not to run this submission. It does raise an interesting view of distribution challenges and issues with business forecasting. Also, it is about beer and it is the weekend, so... enjoy!]

Arthur T Knackerbracket has found the following story:

The beer distribution game (also known as the beer game) is an experiential learning business simulation game created by a group of professors at MIT Sloan School of Management in early 1960s to demonstrate a number of key principles of supply chain management. The game is played by teams of at least four players, often in heated competition, and takes at least one hour to complete. A debriefing session of roughly equivalent length typically follows to review the results of each team and discuss the lessons involved.

The purpose of the game is to understand the distribution side dynamics of a multi-echelon supply chain used to distribute a single item, in this case, cases of beer.

The object of the game is to meet customer demand for cases of beer through the distribution side of a multi-stage supply chain with minimal expenditure on back orders and inventory. There are four stages, manufacturer, distributor, supplier, retailer, with a two-week communication gap of orders toward the upstream and a two-week supply chain delay of product towards the downstream. There is a one-point cost for holding excess inventory and a one-point cost for any backlog (old backlog + orders - current inventory). In the board game version, players cannot see anything other than what is communicated to them through pieces of paper with numbers written on them, signifying orders or product. The retailer draws from a deck of cards for what the customer demands, and the manufacturer places an order which, in turn, becomes product in four weeks.

Verbal communication between players is against the rules so feelings of confusion and disappointment are common. Players look to one another within their supply chain frantically trying to figure out where things are going wrong. Most of the players feel frustrated because they are not getting the results they want. Players wonder whether someone in their team did not understand the game or assume customer demand is following a very erratic pattern as backlogs mount and/or massive inventories accumulate. During the debriefing, it is explained that these feelings are common and that reactions based on these feelings within supply chains create the bullwhip effect.

The game is used to illustrate one of the links between System Dynamics theory and the Feedback Control Theory which inspired it - that systems with negative feedback loops and time delays can lead to oscillation and overload, a pattern of behavior observed in many real-world systems.

For a complete understanding, the game is played not only within a supply chain, but two or three supply chains are set up (when there are enough players and volunteers to help). In real life, more than the understanding one gets by playing as different entities in a single supply chain, it is the learning when supply chains compete with each other that makes clear the real strategic intent.

The team or supply chain that achieves the lowest total costs wins. The game illustrates in a compelling way the effects of poor system understanding and poor communication for even a relatively simple and idealized supply chain. Although players often raise the lack of perfect information about the customer orders as a primary reason for their poor team performance in the game, analysis of the minimum possible score under different conditions shows an expected value of perfect information of 0 for the standard game and simulations that included giving players perfect information still showed poor team performance.

The Beer Distribution Game is cited as an inspiration for at least one business-oriented learning game in the business oriented experimental learning field: The Friday Night at the ER game follows the same 4-player per board, 90 minute gameplay simulating real-world complex system, game session followed by detailed debrief model used by the Beer Distribution Game to teach players systems thinking concepts.


Original Submission

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  • (Score: 4, Funny) by The Mighty Buzzard on Sunday December 03 2017, @06:17AM (3 children)

    by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Sunday December 03 2017, @06:17AM (#604584) Homepage Journal

    Do nothing at all and you have a shitload of beer. Sounds like a pretty solid win to me.

    --
    My rights don't end where your fear begins.
    • (Score: 2) by BsAtHome on Sunday December 03 2017, @08:26AM (2 children)

      by BsAtHome (889) on Sunday December 03 2017, @08:26AM (#604600)

      Yes, my 15 million liter reserve does hold the fort. Never ever requiring to be sober, again.

      • (Score: 2) by c0lo on Sunday December 03 2017, @09:38AM (1 child)

        by c0lo (156) Subscriber Badge on Sunday December 03 2017, @09:38AM (#604606) Journal

        I see you like warm, spoiled beer.

        --
        https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
        • (Score: 3, Funny) by BsAtHome on Sunday December 03 2017, @10:48AM

          by BsAtHome (889) on Sunday December 03 2017, @10:48AM (#604613)

          The alcohol remains. And with good storage(*) and time, there will be lots more of it (alcohol, that is). And then, by the time I get through a large swat, my liver will give up anyway. What could possibly go wrong with such fine strategy?

          (*) You did notice the "fort" I use for storage, didn't you? It has a cellar and lots of cool space.

  • (Score: 3, Insightful) by aristarchus on Sunday December 03 2017, @11:01PM (1 child)

    by aristarchus (2645) on Sunday December 03 2017, @11:01PM (#604834) Journal

    Sloan School? You know what they call it at MIT? What if we were to throw the cannibal-missionary problem, or the traveling saleman, at these baby MBAs? Maybe it would be better if we designed a flash game where they could shoot birds at pigs, or something. We could offer a loot box that may, or may not, contain a corner office! It would keep them busy for hours, and thus prevent much expensive meddling with the people who get the actual work done.

    • (Score: 0) by Anonymous Coward on Monday December 04 2017, @12:54AM

      by Anonymous Coward on Monday December 04 2017, @12:54AM (#604867)

      Sloan School? You know what they call it at MIT?

      No. I've heard the students called "sloanies", do you have further information?

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