Beer Game Analysis

3570 words 15 pages
* Introduction:
The beer game is a simulation first developed at the Massachusetts Institute of Technology’s Sloan School of Management in the 1960s. This game was made in other to experiment how real organisations functions, where the consequences of every decisions play out as clearly as possible in the game as they would in a real organisation (Senge, 1990). Narayanan Arunachalam (2006) described the game as a popular classroom exercise for business schools conceived at MIT with the primary purpose of demonstrating industrial dynamics. The beer game is a “laboratory replica” of a real organisational setting, helps to highlight the possible disabilities and their causes of an organisation. The beer game however in this case was created
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After using the zero strategy for a few weeks, we found the backorder like a chain reaction star from retailer up to the factory.

* Zero inventory and Safety stock:
We know that in the real business, zero inventories and stock means that the company’s ability of resisting the risk of backorders and shortage of supply is reduced. But this is the case in the beer game where we went on with zero inventory and safety stock for weeks. This showed that the company was incompetent in meeting its own standards.

* High rise of cost:
Cost control is very important for a company, high cost operation is unacceptable. During the beer game, due to the high cost of back orders, we were running on an outrageous cost per week. This was either due to enormous inventory or massive backorders. The cost of the backorders $1.00 and inventory cost $0.60. After we finish this game, we found that the cost of each supply chain operator was high and a total cost of $2, 862. At the initial stage, the increase in cost was little and similar when back orders rose, the cost became tremendous.

* Delay in shipment (Long lead time):
During the game, it took two weeks for the retailer to get supplies from the

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