The Distribution Game Modified from the MIT game
The Distribution Game • This game originated from MIT’s “Beer Game.” • It was created to demonstrate the “Bullwhip Effect” and how shared information can created a more efficient and effective supply chain. • It also illustrates the basis of Supply Chain Management and its principles. • How single parts of the supply chain influence each other • How individual thinking differs from systematic or network thinking • Potential for system optimization and the use of information systems.
Supply Chain Board Setup • Competitive-Cooperative Game with limits on Cooperation • Each team will compete against each other Orders Going Upstream Manufacturer Distributor Wholesaler Retailer 2 Week Delay 2 Week Delay 2 Week Delay Product Going Downstream
Objectives and Rules of the Game • You and your fellow classmates will try to run the most efficient and effective supply chain by minimizing inventory and stock-out costs. • Each student or team will take on of the following roles: • Manufacturer • Distributor • Wholesaler • Retailer • You cannot talk or communicate with the rest of the supply chain.
Objectives and Rules of the Game • You cannot look ahead at orders. • Each turn = 1 week • Shipping and order delays are 2 weeks long • This is know in industry as “lead time.” • Every order must be fulfilled. The orders never cancel out and are good until fulfilled. • Each team/student will follow the instructor’s lead for each week.
Steps The following steps will be repeated each turn or week • Receive the shipment of product from upstream and place it into your inventory • Receive the order from downstream and fulfill the order by shipping the appropriate number of products downstream. • Record your inventory or backlog for the week on the given sheet • Place your order upstream. The week is then completed!
Costs • The lowest cumulative cost wins • Costs will be calculated according to the following rules: • Costs: are cumulative over time • Each unit of inventory costs $.50 per week • Each unit of Backlog costs $1.00 per week • Backlog: an order that cannot be fulfilled when it is received. • Backlogs will be calculated the following way: Last week’s backlog + New orders = Orders to Fill Orders to Fill – Amount Shipped = Current week’s backlog
Costs • Each team/student will be responsible for keeping track of costs from week to week. • Each team/student will be responsible for charting customer orders and inventory/backlogs from week to week. • Forms will be given to help with these activities and will be collected at the end of the game.
General Observations • What did you think about the other entities in the supply chain • Did they show great skill? • Did they have your interest at heart? • Did they show disregard for your needs? • General Observations: • Performance tends to be poor • Similar patterns always occur • Lack of communication can cause frustration between supply chain partners.
Improvement in the Supply Chain through better Management • How could you improve information flows? • How could you improve forecasting? • Is it feasible to eliminate the wholesaler and distributor? • How could you improve order policies?