The Beer Game

[Steve Prevette]

This thread is for the Beer Game. This will be an essay question on the midterm related to this experience.

Here are some links for the Beer Game:

http://web.mit.edu/jsterman/www/SDG/beergame.html

http://www.forio.com/nearbeer.htm


The comments from last year's MC506 class are available below, please add your comments for 2005. Worth +1 point on the Midterm.

[Hershal]

There's NO BEER in the beer game? So much for Metrologists playing....

Hershal

[Wes Bucey]

I'm confused. I understand all about "rubber banding" or "bull whip" in supply chains. I am unsure about the mechanics of this game. The player instructions seem to imply the consumer demand is "random" (within limits) as represented by a "deck of cards." The discussion, however, states the consumer demand is level, starting at 4 cases/week, rising to 8 cases/week. Did I miss something in the information presented or are there "secret instructions" (i.e. a rigged deck of cards?)

This looks like a lot of fun (at least as much as "red beads.") Thanks for bringing it to our intention.

[Steve Prevette]

Originally Posted by Wes Bucey

I'm confused. I understand all about "rubber banding" or "bull whip" in supply chains. I am unsure about the mechanics of this game. The player instructions seem to imply the consumer demand is "random" (within limits) as represented by a "deck of cards." The discussion, however, states the consumer demand is level, starting at 4 cases/week, rising to 8 cases/week. Did I miss something in the information presented or are there "secret instructions" (i.e. a rigged deck of cards?)

This looks like a lot of fun (at least as much as "red beads.") Thanks for bringing it to our intention.

Actually it is "rigged". You tell the participants that "anything can happen" to demand, but all that actually happens is the demand goes from a steady state of 4 per week to a steady state of 8 per week. And yes, the results are very predictable, both groups of students experienced the bull whip. I will be charting and posting the groups' results in excel here.

[Tim Folkerts]

This is an interesting problem. I'm sure other minds have contemplated this challenge, but it got into my head and couldn't quite let it go. As I think about it, I have concluded that a "bull-whip" is 1) inevitable and 2) the best solution to the problem as stated (e.g. known delays up the supply chain, no marginal cost for sudden changes in production).

I think I have a pretty logical and efficient algorithm for placing orders and maintaining inventory (even when the orders at the retail outlet are not simply 8 after the first day), but then I realized this is also a class project and I don't want to be doing the students' homework for them . So maybe I'll give my answer later to see if it can match the students' scores.

Other observations:
1) This seems like the funnel problem - continually reacting to changes just makes things worse.
2) This also seems like the problem of controlling a furnace's temperature when doors are opened, loads change, etc. There are well developed algorithms for such situations that could be applicable here.



Tim F

[Wes Bucey]

Here's a "game site" which seems to come close to replicating the beer game. Try it a little and see if you agree

http://www.lemonadegame.com/

[Steve Prevette]

Originally Posted by Tim Folkerts

I think I have a pretty logical and efficient algorithm for placing orders and maintaining inventory (even when the orders at the retail outlet are not simply 8 after the first day), but then I realized this is also a class project and I don't want to be doing the students' homework for them . So maybe I'll give my answer later to see if it can match the students' scores.
Tim F

If you "google" on The Beer Game, you will find some sites that do propose computer algorithms for this problem. The primary issue is keeping track of what you have already ordered in the past that is yet to come to you. It is sort of like trying to judge the 2nd derivative (acceleration) of the problem. I am reminded of the problem of "hovering" manually in a submarine. I was never good at judging the amount of water to bring on or pump out. You really had to have a good judge for acceleration and once the depth bottomed out, immediately start flooding water in, rather than waiting to get to the ordered depth before starting to bring on water, or the submarine will build up more and more oscillations about the ordered depth.

[Bill Pflanz]

Steve,

I know you are teaching Quantitative Methods which involve creating forecasting algorithms but have you thought about how a series of control charts could prevent the problems described?

Tim commented on the beer game similiarity to the funnel problem which is the reason for the question.

Bill