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Root Beer Assignment

The root beer game is a supply chain simulation developed in the 1960s at MIT. It involves teams competing to distribute cases of root beer to customers with the lowest inventory and backorder costs. The game illustrates key supply chain principles like the bullwhip effect where demand fluctuations increase up the supply chain. It shows how lack of information sharing between supply chain stages can reduce efficiency. Players aim to understand the challenges faced by each role and how improved collaboration can benefit the whole chain.

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Vishakha Roy
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68 views4 pages

Root Beer Assignment

The root beer game is a supply chain simulation developed in the 1960s at MIT. It involves teams competing to distribute cases of root beer to customers with the lowest inventory and backorder costs. The game illustrates key supply chain principles like the bullwhip effect where demand fluctuations increase up the supply chain. It shows how lack of information sharing between supply chain stages can reduce efficiency. Players aim to understand the challenges faced by each role and how improved collaboration can benefit the whole chain.

Uploaded by

Vishakha Roy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Supply Chain Management

“Assignment: Root Beer Game”


Root Beer Game

Some professors at the MIT Sloan School of Management developed the root beer game, in
the early 1960s to illustrate several important supply chain management principles. Teams of
at least four participants play the game, which usually involves competitive altercations and
lasts for at least an hour. Usually, each team's outcomes are reviewed, and the lessons learned
are discussed during a debriefing session that lasts around the same amount of time.

The game aims to comprehend the dynamics of a multi-tier supply chain that distributes a
single item, in this example, cases of root beer.

Fig 1: The different supply chain entities in the root beer game (Source: rootbeergame.com)

Significance of the root beer game

In order to win the game, players must distribute cases of root beer to customers while using
the least amount of inventory and backorders possible. Manufacturer, distributor, supplier,
and retailer are the four stages, with orders going upstream having a two-week
communication gap and products going downstream having a one-week supply chain delay.
The game highlights the effects of inadequate system understanding and communication in an
idealized and relatively simple supply chain.

Possible learning objectives

 Supply Chain Communication - It effectively conveys why different departments


must have better access to information to collaborate more closely. We can
comprehend the challenges faced at each level of the supply chain and important
parameters for evaluating performance of the chain.
 Bullwhip Effect - Retail demand changes can have a steadily increasing impact on
wholesale, distributor, manufacturer, and raw material supplier, which can then have a
slowly rising impact. Three fundamental issues—a lack of knowledge, the design of
the supply chain, and a lack of cooperation—are the main contributors to the bullwhip
effect.
Fig 2: The Bullwhip Effect (Source: Beer distribution game (2021) Wikipedia)

Possible learning that you have gained from this simulation game

 Understand the challenges of a supply chain manager - A beer game session is a


fantastic approach to observe a supply chain from the viewpoint of the planner. It took
much work to predict the order for the next month because of fluctuating demand, and
the wholesaler suddenly stopped ordering, which led to the piling up of inventory.
 Bullwhip Effect – As we were higher in the supply chain, the bullwhip effect
impacted us more, and in the beginning, there were many backlogs. To reduce
backlogs, we increased our order size, and the holding cost increased due to demand
reduction later.
 Supply Chain Communication – We learned the importance of having accurate
information at each stage of the supply chain. It was difficult to anticipate the demand
and place an order. We felt it would have been more efficient to communicate with
others in the supply chain.

Why overall costs are so high?

Players are so preoccupied with improving their performance that the chain suffers, most
notably due to the infamous Bullwhip Effect. Due to the bullwhip effect, there is either high
inventory holding cost or high backlogs, increasing the costs. In our case, high backlogs were
there in the beginning, and inventory started piling up after increasing the order size.

Why inventory holding/backlogs are very common in the supply chain?

Inventory holding and backlogs occur as the supply chain cannot adjust to fluctuating
demands. Agile supply chains achieve better results, this can be achieved by continuous
improvement, and contemporary methods are resulting in supply chains that are more flexible
and robust. Shorter production/distribution cycles make it easier to adapt to changes in
demand.
References

1. Rootbeergame.com. Available at: http://www.rootbeergame.com/ (Accessed: January


31, 2023).
2. Beer distribution game (2021) Wikipedia. Wikimedia Foundation. Available at:
https://en.wikipedia.org/wiki/Beer_distribution_game (Accessed: January 31, 2023).

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