The Beer Game: MIT/Sloan’s Classic Supply Chain Simulation

The Beer Game MIT Sloan School of Business

MIT Sloan's Beer Distribution Game

One of the most effective ways of imparting knowledge on a group of eager students is to break out of the lecture paradigm, get everyone to roll up their sleeves, and get hands-on.

Business simulation experiences are one such powerful method of instruction. And MIT’s famous “Beer Game” is one of the best. If there is a tool in supply chain management education that has been discussed more frequently, and taught lessons more effectively, I certainly do not know what that tool might be.

The game challenges participants to balance supply and demand, address the human factors that are vital to the supply chain, account for the bullwhip effect, enhance communications, and meet the complexities of forecasting demand.

It is also a very good primer for organizations who seek to install sales and operations planning or collaborative forecasting and  replenishment into their business processes.

In today’s edition of, the elegant simplicity of this game is explored, and some of its myriad secrets are revealed:

“Everyone, take your order slips and move the shipment to the left,” says Nelson Repenning, a professor of systems dynamics at the MIT Sloan School of Management. “Factories, brew beer.”

With that, six groups of high-achieving managers from a major multinational firm, ensconced in MIT’s Building E62, check some small slips of paper, move piles of red chips along the tables where they are seated, and scribble numbers on some rudimentary accounting forms.

The executives are playing the Beer Game, a business simulation that is an institution at MIT, where management guru Jay Forrester invented it in the 1960s; every entering class in Sloan tries it en masse at the beginning of the academic year. The Beer Game is at once simple to play, difficult to master and full of lessons.

Among other things, the game illustrates the nonlinear nature of industrial and economic changes; the futility of blaming employees for problems beyond their control; and our general tendency to impose preconceived ideas on complex situations. Understood properly, Repenning tells the executives, the Beer Game shows that “operations must be managed as a system, not as a set of isolated activities.”

That seems like a lot to draw from a game played on printed plastic tablecloths with supplies you could find in a drugstore. But the Beer Game has been a durable teaching tool because it hammers home a core element of MIT management thinking: Every aspect of business is a system. A company is a system. A supply chain, which the Beer Game mimics, is a system of smaller businesses. A factory is a system of machines and routines. And when one small part goes awry, a whole system can fail.

“Somewhere in America, in some way, shape or form, a company is essentially playing the Beer Game every day,” says John Carrier, a senior lecturer at MIT Sloan who specializes in improving manufacturing operations. “They just don’t realize it.”

‘We’re terrible at this game’

Each team in the Beer Game consists of people at four stations, representing a beer retailer, a wholesaler, a distributor and a brewery. The game lasts for 50 rounds, each standing for one week. (Read more…)

If you have participated in this simulation, we would very much like to hear from you….what did you learn….did you have fun….did it make you think? We welcome your comments.

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