7.2.2 The Beer Game scenario
The supply chain is made up of four channel members. The extreme downstream channel member is the retailer and the extreme upstream supply chain member is the manufacturer with the distributor and wholesaler sitting in between. This represents a simple supply chain made of beer manufacturing, distribution and retailing businesses.
Figure 7.1 Overview of the supply chain system
In your text
Read your text ( Appendix A ) for a detailed description of the game and the assumptions inherent in the supply chain model.
We summarise the overall scenario below:
- Each facility has unlimited storage capacity.
- The manufacturer (factory) has unlimited raw materials.
- There is a fixed supply lead time and order delay between each component.
- Each week, each facility (component) tries to meet the order coming from the firm downstream of it. No orders are lost and if an order cannot be met with available inventory at the facility, a back order is recorded, which eventually must be met.
- Each firm owns the inventory at the facility and those in transit to its upstream firm.
- There is an inventory holding cost of $.50/item per week and items back ordered cost $1.00/item per week.
The goal of the retailer, wholesaler, distributor and factory is to minimise total cost, either individually or for the system.
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