Beer/Wine Game

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Niall Palfreyman
Senior Member
Posts: 56
Joined: Fri Mar 29, 2002 3:39 am

Beer/Wine Game

Post by Niall Palfreyman »

John Sterman schrieb:

> 1. we always tell people the game will run 50 weeks...

Right, thats what Ill do in future.

> 2. what were the incentives? we usually run the game with inventory
> costs of $0.50/case/week and backlog costs of $1.00/case/week.

We worked with 1Euro/crate.week for inventory and 2Euro/crate.week for
backlog.

> its important to make the incentives salient and to motivate people
> to pay attention to them so they try hard to minimize their team
> costs.

I think thats probably a crucial point that I didnt sufficiently
emphasise. My hope is that that would solve the problem of the order
fluctuations in the first few weeks.

> 3. Its also important to make the incentives and goals very clear
> in the briefing, and to get some competition going across the teams.

We didnt have the competitive element because all 5 groups were
involved in one single supply chain, making group decisions on ordering.
I also specifically said at the beginning that the aim was to reduce the
_total_costs_ of all links in the supply chain, which prompted some
altruistic behaviour, with groups trying to buffer their demand on other
groups. Would it be a good idea to offer incentive for the groups to
reduce their _individual_ costs by creating a pot which goes to the
group with least costs? On the other hand that would be unfair on the
manufacturer, who has the hardest job. Hm. Could it be that this is a
fundamental flaw in my way of running the game?

> 4. having base demand of 2 that changes to 4 means the integer
> constraint on order size may inhibit some ordering. we use 4
> changing to 8.

Oh. I had thought you used 2-4. Ill change that right away. What are
typically the highest orders you get? Ours never went above 10.

Thanks very much for the information.

Best wishes,
Niall Palfreyman.
From: Niall Palfreyman <
niall.palfreyman@fh-weihenstephan.de>
Niall Palfreyman
Senior Member
Posts: 56
Joined: Fri Mar 29, 2002 3:39 am

Beer/Wine Game

Post by Niall Palfreyman »

John Wolfenden schrieb:

> Did you observe any behaviour that could be attributable to different
> learning/engagement styles?

Oh gosh, I hadnt really thought about that. I tend to just generally
pay attention to the V and K sides because thats what most people seem
to attend to most consciously, and then bring in verbal descriptions and
tonality as they are required to explain things. I for instance made the
conscious choice to organise the various groups in the supply chain in
their proper order around the room to heighten the kinaesthetic
understanding of the flow of material and information, and then didnt
bother showing a diagram of the chain. My aim was to increase the
"immersion" of the experience and avoid the students adopting a
"fly-on-the-wall" standpoint.

As for the behaviour of the students, they seemed to enjoy discussing
the decisions within the teams, and built up a friendly rough-and-tumble
relationship with their suppliers and customers. I think this was partly
due to the division into groups and their spatial organisation along the
chain.

Come to think of it, I did notice one group of behaviours relating to
sensory and engagement styles which may pertain to the fact that the
game did not run as wildly as I had expected. The Manufacturer group had
to put up with more extreme odering than the other groups, and they were
on the whole an auditory-oriented and similarity-oriented group. As a
result, when they got worked up about the fluctuating orders, they
group-talked themselves round into an understanding (or at least a
forgiveness) of the order behaviour, and then responded relatively
sensibly.

On the other hand, the Retailer group was more kinaesthetically oriented
and difference-oriented. They got bored with the string of customer
orders and started trying to create some excitement by creating their
own order fluctuations. It would have been interesting to see how they
responded to the stresses of the Manufacturer group.

Have I answered the question? Ive certainly enjoyed being made to think
about this aspect of the game - thanks!

Best wishes,
Niall.
From: Niall Palfreyman <
niall.palfreyman@fh-weihenstephan.de>
"Keith Linard"
Junior Member
Posts: 9
Joined: Fri Mar 29, 2002 3:39 am

Beer/Wine Game

Post by "Keith Linard" »

This query has prompted some invaluable responses on teaching-learning
approaches. I have been challenged to arise from passive reader to offer my
approach to using the beer game.

1. Typically the first lecture of both undergraduate and post-graduate
courses focus on "I am part of the system", with students doing a number of
type indicator tests (Hermann Learning Styles, Modified Myres-Briggs etc)
to increase understanding that our interpretations of events and
relationships (our mental models) is partly learnt and partly the result of
deeper cognitive-psychological responses.

2. Because of time constraints I tend to use the multi-user beer game
(capable of up to 10 teams each with separate Retail, Wholesale, Distributor
& Factory chain of PCs) that came with Powersim Constructor (which I
upgraded with better graphics). I have used board version of both the
Beer Game & Emergency Room at 9:00pm about 20 times. The multi-user
computer version is not as much fun, but I find the results are pretty much
the same ... and I can follow the evolving chaos on the games master
screen, which assists greatly in the de-brief. The game still typically
takes 40 to 50 minutes.

3. The debrief, which is always on the same day, typically takes 2 hours,
which includes watching the video of John Stermans MIT class. This is an
invaluable teaching aid. In the debrief, I also return to the "I am part of
the system" issue ... certainly structure is a critical factor, but
individual cognitive-psychological factors are important. Some players
are risk-averse, some get flustered and panic in the face of the dynamics,
some are impetuous, some highly reflective ... and typically the supply
chain will have a mixture of these ... and where they are placed in the
chain would seem to dampen or accentuate the degree of chaos.

4. Most importantly from my perspective, the next lecture introduces the SD
software by way of building a crude 2 stock goods-on-order -
goods-in-stock inventory chain, initially with no controls on stocks going
negative or stocks being sent backwards. The typical out-of-control
result. Students are given the task of identifying why the crazy results
... and the real learning starts.
* the business rules are invalid (stocks cant go below zero)
- which leads to a discussion of situation where organisations sell what
they dont have, e.g. airline tickets
* the business rules again (you cant send back ordered goods)
- again, are there business where this is the practice
(NOTE: I have found much better understanding by using the term business
rule as synonymous with flow)
* the fact that staff typically operate within standard operating
procedures constraints, and would not be able to order 1,000,000 cases of
beer.
* at this stage I also introduce the issue of integration method ... to
what extent are the oscillations genuine or an artificially induced by
inappropriate time step or integration method

During the above steps the students progressively improve their model,
testing the implications of the changes.

5. The first student assignment is to take a 3 stock inventory model,
modify the business rules (flows equations) so that they are plausible for
the context, and modify the key performance indicators so that the
feedback structure drives the system to equilibrium in the face of shocks,
increasing demand or one off increases (as in the beer game). Students
typically invest about 10 to 15 hours outside work (for a miserly 10% mark).
The learning is very significant.


Keith Linard
From: "Keith Linard" <
k-linard@adfa.edu.au>
John Sterman
Senior Member
Posts: 117
Joined: Fri Mar 29, 2002 3:39 am

Beer/Wine Game

Post by John Sterman »

Niall is setting a great example by providing both his beer game
model and candid reflections on the experience. the description was
informative.

a couple of points.

1. we always tell people the game will run 50 weeks, but run it only
36, precisely to avoid the horizon effects Niall describes. the
record sheets have room for 50 weeks of entries as well, so no one
can glean the true length of the game from any cues in the setting.

2. what were the incentives? we usually run the game with inventory
costs of $0.50/case/week and backlog costs of $1.00/case/week.
building up large stocks in anticipation of future demand is then
costly, and getting into a backlog very costly, both of which
encourage people to take measures to control inventory tightly. if
they do, and if they ignore the delays, the result is oscillation.
its important to make the incentives salient and to motivate people
to pay attention to them so they try hard to minimize their team
costs.

3. Its also important to make the incentives and goals very clear
in the briefing, and to get some competition going across the teams.
to reinforce the incentives, we have all participants make a small
wager, traditionally $1/person, with the pot going to the team with
lowest total costs. at least in the groups we run, this small
incentive is a strong motivator (true even for CEOs - its a marker
for their ego, and they hate to lose).

4. having base demand of 2 that changes to 4 means the integer
constraint on order size may inhibit some ordering. we use 4
changing to 8, but you can argue that even larger base numbers would
further reduce the discrete character and get you closer to a
continuous flow setting.

5. we prohibit communication across the echelons, and dont provide
much information on the order pattern - people, as in real life, must
forecast it based on their own experience.

For further information, see Sterman, J. D. (1989). "Modeling
Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision
Making Experiment." Management Science 35(3): 321-339.

John Sterman
From: John Sterman <jsterman@MIT.EDU>
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