Introduction to

OPERATIONS
MANAGEMENT

Beer Game

Supply Chain
Placed orders

Consumers

Retailer

Wholesaler

Distributor

Factory

Delivery of products

Instructions

Each round represents one week of activities in your SC.

In each round you have to keep track of:

The amount of INCOMING DELIVERY/ INCOMING PRODUCTION at
the beginning of the round.
The INVENTORY level upon the incoming delivery.
The INCOMING ORDER of your customer.
The OUTGOING DELIVERY.
The INVENTORY (backlog ) level at the end of the round.

BACKLOG
Demand that cannot be satisfied
by the current inventory and has
to be satisfied in the following
periods.

EXAMPLE
Your demand is 10 and the
current inventory is 2. You can
deliver only 2 units and 8 units
will be in the backlog.

Instructions

The holding cost is .

The backlog cost is .

THE OBJECTIVE
How many beers to order from your supplier in order to minimize the
supply chain costs:
if you order too much there is a risk of having too many beers in the
stock (too costly)
if you order too little there is a risk of having unsatisfied demand
(too costly).
Note that ALL DEMAND HAS TO BE SATISFIED.

Steps to follow in each round

1.

With your right hand move forward the units in transit from your
supplier.

2.

Write the amount of units you have received in your inventory.

Write the amount of the current inventory level (I t).

With your left hand move forward the orders placed

customer.

by your

The demand of the final customer is revealed to the retailer.

Write the amount of incoming orders (O t) and total requested units for this
round (Rt) .

3.

Deliver the units to your customer (place the units on the outgoing
delivery at your left side).

Write the amount of the outgoing delivery (S t), total inventory level (It)
and backlogs for this round (Bt).

4.

The factory manufactures the production request.

5.

Place an order to your supplier (empty envelope at your right side).

The manufacturer sends the production request.