Group 10 GVHD: Cao To Linh

SCM 144208 School of Economics and Management

REPORT OF BEER GAME

INTRODUCTION
 What is the beer game?
In this game you play as an actor of the distribution network of a beer company.
It lets you experience the classical
coordination problems met by
industrials.
Weather played in a scholar or
managerial context; it is a good
introduction towards supply-chain reform & innovation. (MA system, 2023)

 How to play beer game?

The primary objective of the Beer Game is to minimize the combined costs of
holding inventory and backorder (running out of stock) over a series of simulated
weeks. Players decide how much beer to order from their immediate upstream
supplier based on their current inventory levels, incoming customer orders, and
the unpredictable pattern of consumer demand.
Rounds of the game are played, with each round representing one week, in the
simulated supply chain. Players must decide on the quantity of beer to order and
send these orders to their respective suppliers. There is a built-in delay in the
supply chain, representing lead times for production and transportation. No direct
communication between players is permitted., which simulates the real-world
constraints in information flow across the supply chain.
Roles within the Supply Chain (Retailer, Wholesaler, Distributor, Brewery)
The Beer Game's supply chain consists of four main roles, each with specific
responsibilities:

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SCM 144208 School of Economics and Management

 Retailer: The retailer receives customer orders and must fulfil them using
their inventory. The retailer orders beer from the wholesaler to replenish
stock and meet future demand.
 Wholesaler: The wholesaler receives orders from the retailer, fulfils them
with available inventory, and places orders with the distributor to maintain
sufficient stock levels. The wholesaler bridges the gap between the
retailer's needs and the distributor's supply.
 Distributor: In between the wholesaler and the brewery is the distributor.
Distributors receive orders from wholesalers, fulfil them using their
inventory, and place orders with the brewery to maintain stock levels.
 Brewery (Manufacturer): The brewery is responsible for producing beer to
meet the demand from the supply chain. The brewery receives orders from
the distributor, adjusts production levels accordingly, and ships beer to the
distributor to fulfil their orders.
Each player in the Beer Game must balance the challenges of managing inventory,
responding to fluctuating demand, and minimizing costs, all while operating with
limited information and communication. This setup highlights the complexities of
supply chain management and demonstrates the need for effective collaboration,
information sharing, and systems thinking to optimize performance. (Linkedin,
2023)
The cost calculation formula is
cost =inventory∗$ 0.5+ backorder∗$ 1.0

 Where to play beer game?

Here are some websites where you can play the beer game for supply chain:
1. The Beer Game by Zensimu: This is an online supply chain simulation game
that allows you to host remote or live Beer Game sessions. It's used by
companies and universities alike to meet a wide range of objectives, from
reproducing real challenges within supply-chain processes to optimizing an
organization’s overall performance. The game is available in English,
French, Spanish, and German.
( https://beergameapp.com/ ).

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

2. Beer Game by Zensimu: the best Supply chain learning tool: This website
provides an online beer game simulation to meet a wide range of
objectives. It's a fun and engaging serious game experience.
(https://zensimu.com/beer-game/).
3. MA-system Beer Game: In this game, you play as an actor of the
distribution network of a beer company. It lets you experience the classical
coordination problems met by industrials.
(https://beergame.masystem.se/.)
4. Beer Game - Corporate training Skill Dynamics: This game simulates up to a
year in the beer-distribution supply chain. If any players are missing, AI bots
can play their roles and you can even take part as a single player.
(https://skilldynamics.com/supply-chain-beer-game/.)

REPORTING RESULTS
Group 10 played 5 games with 4 50-week games (MA system) and 1 24-week
game (transentis Beergame) and gained many interesting experiences.
1. First stage
Due to not fully understanding the rules of the game, group 10 had many
failures in the first game, specifically:

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

For example, we have the Inventory Record Sheet of Retailer

During the first 8 weeks, the chain did not have much fluctuation.
 Retailer's orders are quite low, mostly 100, at most 300.
 Low orders lead to Retailer's Inventory gradually decreasing to 100.
 Backorder is always 0 so Cost is always low, 200$.
It can be said that this is a great start when Inventory is low, Backorder is 0 and
Cost does not increase.

But in the next 9 weeks, the chain experienced fluctuations, when Customer
Order increased sharply but Inventory was too low (100 in week 8) lead to run out

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

of goods for Retailer to supply. As a result, Backorder increased sharply, peaking

at 780 backorders. Because of lack of experience, Retailer increased the Order,
creating pressure on Wholesaler.

In the last 7 weeks, we see the chain completely collapse.

 Orders continued to increase to over 1000.
 Cost, Backorder continued to increase.
 Inventory is always equal to 0.
It can be seen that just a small fluctuation can cause the chain to go down.
Retailer was too hasty when faced with fluctuations.

Here are some other charts for comparison!

2. Complete Stage

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

In the next games, Group 10 switched to Beer game (MA system) with 49 weeks.
There are some changes such as:
 Inventory to Stock.
 Backorder to Backlog.
 $ to €.
Below is a quite successful game of our group.

 Cost: throughout the session our supply-chain required €72,740.

 Service level: during 39 weeks at least one of the stakeholders had
backlog. That's 76% of the session time. Good point however: the
Retailer was never out of stock, so our beers were always available for
sale.
 Variability: the biggest order was sent by the manufacturer on week 11:
30pcs.

During the game, we can see that the charts of the four players have relatively
different shapes.
 Retailer had no backlog but has the highest stocks compared to other
players. This has led to large inventory maintenance costs.

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

 Retailers play too cautiously, always placing orders higher than actual
demand, leading to too large inventory and high costs. This style of
play is not flexible and does not respond promptly to market
fluctuations.
 Wholesaler was the opposite. Because the order was too small, the
wholesaler did not have stocks in time to deliver to Distributor players.
This made the wholesaler's backlogs too high, leading to the highest
total cost among the four players.
 Wholesalers play too frugally, always placing orders lower than
actual demand, leading to too many delayed orders and highest
costs. This style of play lacks sensitivity and does not ensure the
connection of the supply chain.
 Distributor has the lowest cost because wholesaler always keeps stocks
and backlogs low.
 Distributors play quite well, always meeting the needs of retailers
without having to bear costs due to inventory or delayed orders. This
gameplay is balanced and reasonable, taking advantage of the
wholesaler's advantage.
 Manufacture had slightly lower cost than Retailer because he knew how
to adjust the amount of stocks to a moderate level, rather than keeping
the stock level high throughout the entire playing process like Retailer.
Manufacture had inventory in the early weeks but soon adjusted to
having no inventory.
 Manufacturers play quite well, being able to adjust inventory to a
moderate level, not letting inventory get too high like retailers. This
style of play is flexible and suitable to the needs of the wholesaler.
As you can see, Distributor has the lowest cost, only €3,820.So what did he do to
reduce costs?
 Predict changes in Incoming orders to change orders appropriately.
 Maintain a stable inventory level. If there are signs of increased inventory,
reduce orders and vice versa.
 Try not to increase the backorder by increasing the order if the backorder is
high.

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

 The most important thing is to maintain a stable Order level, not changing
suddenly due to fluctuations in the chain.

CONCLUSION
Through playing the Beer game and reading some documents (Linkedin,2023),
group 10 has the following observations about the supply chain.
 The Bullwhip Effect
A phenomenon in supply chain management is the bullwhip effect. Small
fluctuations in consumer demand result in increasingly larger oscillations in orders
and inventory levels as they move upstream through the supply chain. This effect
occurs due to delays in information flow, overreaction to demand changes, and
reliance on forecasts based on outdated information. The Beer Game illustrates
the bullwhip effect by showing how individual decisions at each stage can amplify
these fluctuations, leading to inefficiencies, stock-outs, or excess inventory.
 Information Sharing and Transparency
One of the key lessons from the Beer Game is the value of information sharing
and transparency among supply chain partners. It highlights the importance of
sharing accurate and timely information to improve decision-making,
coordination, and performance. Players often need more communication and
visibility across the supply chain in the game. Transparency can also help mitigate
the bullwhip effect by reducing uncertainties and allowing for more accurate
demand forecasting.
 System Dynamics and Interdependencies
The Beer Game demonstrates supply chain management's complex system
dynamics and interdependencies. Decisions made by individual players can have
unintended consequences on the entire system, often due to delays and lack of
visibility into the actions of others. Understanding these dynamics and recognizing
the potential impacts of decisions on the entire supply chain is crucial for effective
supply chain management.
 Collaboration and Coordination

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

Effective collaboration and coordination among supply chain partners are

essential for optimizing performance and reducing inefficiencies. The Beer Game
emphasizes the need for players to collaborate, share information, and align their
actions to minimize costs. In real-world supply chains, collaboration can help
organizations better manage demand fluctuations, reduce lead times, and
improve overall efficiency.
 Managing Uncertainty and Variability
The Beer Game highlights the challenges of managing uncertainty and variability
in demand and supply. Organizations must adapt and develop strategies to
manage variability as consumer preferences and market conditions evolve rapidly.
Some approaches to address this challenge include:
 Demand forecasting: Accurate demand forecasting allows organizations to
anticipate future demand patterns and make informed inventory levels and
production schedule decisions.
 Inventory management: Implementing efficient inventory management
techniques, such as just-in-time (JIT) or safety stock policies, can help
organizations maintain optimal inventory levels while minimizing costs.
 Flexible supply chain design: Designing a flexible supply chain that can
quickly adapt to changes in demand and supply is essential for managing
uncertainty and variability. It may involve building redundancy, diversifying
suppliers, or adopting agile manufacturing processes.
In summary, the core concepts and lessons from the Beer Game revolve around
understanding the bullwhip effect, the importance of information sharing and
transparency, the intricacies of system dynamics and interdependencies, the
value of collaboration and coordination, and strategies to manage uncertainty
and variability in the supply chain. These lessons remain highly relevant to
modern supply chain management and can help organizations improve
performance and navigate complex challenges.

THE END

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

Members of Group 10:

 Trần Trọng Tấn 20223645
 Nguyễn Duy Minh 20223626
 Nguyễn Đức Nam 20223630
 Chu Thị Huyền Diệp 20223579
 Phạm Thị Ngọc Thúy 20223657
This report was written by Tran Trong Tan & Nguyen Duy Minh
Thank you for reading!

REFERENCES

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Group 10 GVHD: Cao To Linh
SCM 144208 School of Economics and Management

1. https://beergame.masystem.se/
2. https://www.linkedin.com/pulse/beer-game-effect-addressing-todays-
supply-chain-marc
3. https://www.bing.com/?/ai
4. https://www.studocu.com/vn/document/truong-dai-hoc-kinh-te-dai-hoc-
quoc-gia-ha-noi/tieesng-anh-b1/bao-cao-beer-game-cua-beer-dee/
42595725?
fbclid=IwAR139HwwbS6Ik42_B9c3ToaMv1ShjkY3QFg8l9JnwcLff_efADbOdD
VEaDU
5. https://beergame.transentis.com/

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