Understanding logistics with ease: Beer Distribution Game at CBS

All News, Faculty, Inside CBS   -  11. January 2019

Swotting was yesterday: In the MIT Beer Distribution Game, students playfully learn what the “bullwhip effect” in supply chains is all about. At the BVL network meeting, Lisa-Nadine Karrenbauer and Robin Kostoz, student spokespersons of the Bundesvereinigung Logistik (German Logistics Association), together with Dr. Nils Finger, Professor of Supply Chain Management, invited our students to a game at the Cologne Business School.

One game – many fields of application

The Beer Game is considered a classic of the business game and was developed in the 1960s at the Massachusetts Institute of Technology. The original goal of the simulation was to investigate systemic behavioral structures of humans. Only later was it used at universities to enable students to experience the “bullwhip effect” in supply chains. Since then, there have been various adaptations of the game, which have also found their way into management training.

The Beer Distribution Game: delivery difficulties and beer surplus

Before the start of the game, the participants will be assigned the roles “retail, wholesale, distribution center and brewery” in the logistics chain. The task of the individual players is to fulfil customer orders as well as possible in each round and to maintain their own ability to deliver. The players must also try to keep their own costs as low as possible, as stored beer crates lead to storage costs and non-delivered beer crates lead to delay costs. The only communication between the players takes place during the weekly deliveries of the supplier.

After a few rounds, the following scenario appears: The end consumer’s demand for beer rises sharply, resulting in a time lag between order and delivery. As a result, the system is quickly built up, leading to extreme fluctuations in order and stock quantities, and the costs of storage and delivery delays rise. In short, the bullwhip effect occurs in the supply chain. At the end of the game, the player with the lowest costs wins.

Study business administration with a focus on logistics

In order to delve deeper into the subject of Supply Chain Management, the Cologne Business School offers the German-language specialisation “Supply Chain Management” in the Bachelor’s programmeGeneral Management. Starting in the third semester, students learn the basics of strategic procurement and supplier management, distribution management as well as sustainable supply chains, which prepares them for many entry opportunities in logistics.

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