Beer Distribution Game Research Articles

Shifts in task absorption during decision-making episodes

In today’s rapidly evolving technological landscape, this study investigates the impact of new technology on organizational work dynamics. By integrating the Job Demands-Resources theory and the Episodic Process Model, we examine the cognitive mechanisms that influence task performance during decision-making episodes. Our research focuses on episodic job demands and resources, emphasizing the mediating role of task absorption in the relationship between these factors and task performance. Our findings reveal that episodic job resources positively affect task absorption and performance, while job demands moderate the relationship between job resources and task absorption. Employing the Beer Distribution Game alongside neuroscience-based eye-tracking techniques, we analyze visual attention dynamics during decision-making episodes, providing novel insights into the interplay between task absorption and task performance. Theoretically, our study highlights the significance of task absorption in understanding how episodic job resources impact decision-making performance. Practically, our results advocate for the implementation of decision-making-focused skills development through physiological measures such as neurofeedback training programs. This research underscores the importance of individual time management in enhancing task performance, contributing to a nuanced understanding of job resources, job demands, and task absorption in the context of technological transformation.

Can Demand Forecasting Help Supply Chain? Evidence from Beer Distribution Game

One of complex process known nowadays which involves production, delivery and services to consumers is supply chain. Supply chain often can be simplified and analyzed with simulations like Beer Distribution Game. In this research, we use an extended version of Beer Distribution Game, built by AnyLogic, and equipped with additional feature such as information sharing. This research uses a simulation experiment method, and from the experiment’s result we draw a conclusion based on the effect of SMA forecasting. It is shown that by adding SMA forecasting only at the Retailer unit, does not conclusively reduce the BDG’s Total Cost

Data-driven supply chain monitoring using canonical variate analysis

The monitoring of supply chain operations and the ability to detect abnormal operation in a timely manner is important to the functioning and economics of a supply chain system. This paper presents a data-driven supply chain monitoring method based on canonical variate analysis (CVA). A sparse CVA algorithm is used to address singular covariance matrices. In addition, a fault impact prediction method that utilizes the time-dependent relationships inherent in the CVA model is proposed. The proposed monitoring scheme is validated on two case studies — the classical beer distribution game, and a more complicated supply chain that has material flow in forward and reverse directions. The performance of CVA in fault detection is examined and compared against dynamic principal component analysis (DPCA) under cross-correlated and autocorrelated demand. Results show that CVA is effective in detecting abnormal supply chain operations, and achieves comparable performance to DPCA in a lower-dimensional latent space.

Preparing the future entrepreneurial engineering workforce using web-based AI-enabled tools

ABSTRACT Artificial intelligence (AI) is a rapidly developing field with growing importance in engineering, mainly as it serves to better understand and manipulate big data. However, the literature is sparse on how to educate engineers on the use of AI applications. For many years, a role-playing simulation known as the ‘Beer Distribution Game' has been a staple of industrial engineering education and an established vehicle for teaching the fundamentals of supply chain management (SCM) technology. The purpose of the study is to suggest an alternative and effective way to introduce AI and web-based games to students. This paper introduces and applies two types of web-based AI-enabled tools in a second-year industrial engineering classroom including OpexAnalytics (a web-based AI-enabled Beer Distribution Game learning module) and CompareAssess (a web-based AI-enabled tool to promote ‘learning by evaluation’). Findings provide evidence of this 5-week web-based AI-enabled learning module's effectiveness in improving student perceptions and learning outcomes related to the intersection between supply chain management and artificial intelligence. The intention for this module was not to sufficiently prepare students for data science and artificial intelligence work assignments; however, this module offers a starting point for further skill development in higher-level coursework.

Blockchain-enabled beer game: a software tool for familiarizing the application of blockchain in supply chain management

PurposeThis paper aims to introduce, conceptualize and demonstrate a software tool named “Blockchain-Enabled Beer Game” (BEBG) for familiarizing the application of blockchain in inventory management, one of the critical components of supply chain management.Design/methodology/approachThis paper follows a methodology of design-based research and develops a software tool in the form of a role-play simulation game. The proposed game adopts the theme of the traditional beer distribution game to establish a blockchain-enabled scenario for inventory management. A decentralized application (DApp) was prototyped on the Ethereum blockchain to demonstrate the tool.FindingsThe proposed software tool is effective in teaching and training the application of blockchain in inventory management. While interacting with BEBG, players witness how each inventory-related transaction gets secured with blockchain. A basic understanding of the fundamentals of blockchain is a prerequisite for using this tool. BEBG is not self-explanatory, and an instructor is essential for assisting the players.Originality/valueSoftware tools currently available to familiarize with blockchain technology cannot convey its practical applications. Addressing this gap, BEBG allows the users to experience the application of blockchain in inventory management. Academic institutions, especially business schools, can use this tool to teach the students the practical use of blockchain technology. Industries can adopt BEBG for training the employees. The research community can devise BEBG to infer the impact of blockchain in supply chain management.

Do Managers Overreact When in Backlog? Evidence of Scope Neglect from a Supply Chain Experiment

Problem definition: We empirically examine a complementary behavioral source of the bullwhip effect that has been previously overlooked in the literature: that individuals order more aggressively (i.e., overreact) when they face shortages than when they hold inventory. Methodology/Results: We conduct a behavioral experiment using the beer distribution game. We estimate decision rules using multilevel modeling approaches that overcome several drawbacks of the estimation methods used in the earlier literature. We find robust evidence that, contrary to the overreaction when in backlog hypothesis and reports from popular press, decision makers order less aggressively and become insensitive to the scope of the problem when in backlog—a scope neglect phenomenon. Managerial implications: We propose a dual-process theoretical account predicated on affective reactions to explain this scope neglect. Our results suggest that affective reactions under novel operating conditions or dramatic events in supply chains, such as the COVID-19 pandemic, can overwhelm cognitive processing of managers and make them fail to recognize the full scope of the problems faced and update decision models accordingly. Understanding the cognitive-affective drivers of ordering behaviors that generate supply chain instability is important in designing interventions to mitigate their negative effects.

Modeling Perishability in MIT Beer Game Business Simulator

COVID-19 pandemic showed that customers tend to create an excessive inventory, and these demand shocks caused by disruptions or disruption anticipation destabilize the supply chains. The consequences of such demand shocks are hard to predict and model. We present a modified version of the MIT Beer Game which includes product perishability constraints. The model is implemented in Python 3 and uses a client-server architecture and the internet or a local server for players’ interaction. The increased complexity of the game dynamics affects the players’ behavior. The work is aimed at identifying the specifics of supply chain actors’ decisions under constraints of the limited shelf life of a product. The main hypothesis is as follows: when the number of uncertainty factors in the supply chain operation increases, the ability of the supply chain links (players) to implement an effective algorithm for an order and shipment planning decreases. Additional operational measures can help to allocate risks in a more equal way within the supply chain.

System Dynamic Approach to Improve Emergency Response in Humanitarian Logistics in Indonesia

Volatile and vulnerable conditions during disaster relief cause many problems on the coordination of aid replenishments. Research states that partnership improves coordination thus reducing the uncertainty condition along supply chain including in replenishment. This paper aims to fulfill the research gap on examining the impact of partnership in the disaster relief process. Dynamic characteristics model of this case was built by modifying the beer distribution game through Vensim PLE Plus. Model had been validated and verified with the West Java Regional Disaster Management Authority (BPPD). The simulation was run for for two types of product: repetitive demand (food package) and one-time demand (blanket). Total cost, bullwhip effect, and total distribution time for each scenario are then compared. The simulation results show that the proposed scenario, which is developed based on the usage of blockchain on the partnership system, can reduce the total distribution time for about 43% for blanket and 27% for food package. Meanwhile, the total cost for blankets can be reduced for about 29% and 13% for food packages. But on the other side, the partnership system had aggravated the bullwhip effect. Some future potential researches are also proposed in this study.

Inequity aversion in dynamically complex supply chains

Inequity aversion models developed by Fehr and Schmidt (1999) and Bolton and Ockenfels (2000) assume that, in addition to purely selfish subjects, there are subjects who dislike inequitable outcomes. Within the supply chain management literature, these models were used to study fairness concerns. A common limitation in this research area has been the use of rather simple settings, mainly dyadic channels with a single supplier and retailer. Thus, researching social preferences in different channel structures and the idea of multiple-player groups have been suggested as interesting future research areas. In this paper, we present dynamic analyses of the two inequity aversion models and their application in the Beer Distribution Game setting. Our simulation results challenge currently held assumptions about fairness perceptions among supply chain members. We provide some structural explanations for this and suggests future research areas.

Using simulation-based system dynamics and genetic algorithms to reduce the cash flow bullwhip in the supply chain

The bullwhip effect (BWE) is a phenomenon, which is caused by ineffective inventory decisions made by supply chain members. In addition to known inefficiencies caused by the bullwhip effect within a supply chain product flow, such as excessive inventory, it can also lead to inefficiencies in cash flow such as the cash flow bullwhip (CFB). The CFB reduces the efficiency of the supply chain (SC) through heterogeneous distribution of cash among supply chain members. This paper aims to decrease both the BWE and the CFB across a SC through applying a simulation-based optimisation approach, which integrates system dynamics (SD) simulation and genetic algorithms. For this purpose, cash flow modelling is incorporated into the SD structure of the beer distribution game (BG) to develop the CFB function. A multi objective optimisation model is then integrated with the SD-BG simulation model. Finally, a genetic algorithm (GA) is applied to determine the optimal values for the inventory, supply line, and financial decision parameters. Results show that the proposed integrated framework leads to efficient liquidity management in the SC in addition to cost management.

Creative decision making in leaders: A case of beer game simulation

The leaders play a vital role in the decision scenarios in any organization. A qualitative study was conducted using "Beer distribution game" simulation to create an environment of novel and uncertain conditions. Additionally, the study followed the group interviewing technique to explore the underlying patterns in the creative decision-making phenomenon taken by the leaders in complex situations. The findings of the study revealed three categories of factors that contribute to the creative decision making of the leaders. These categories consist of factors related to individuals personal characteristics, team-level factors, and process related factors. The study revealed during the group discussion that creative decision making occurs through a unique interplay of people, process and technology in the Pakistani context. Keywords: Creative decision making, beer game, simulation, group interview technique

Analysis of Bullwhip effect: A Behavioral Approach

ABSTRACTBullwhip effect (BWE) in a supply chain is a phenomenon wherein variance in orders placed increases as one moves upstream in the supply chain. This paper analyses the bullwhip effect from human behaviour perspective using beer distribution game (BDG). Personality traits of respondents were quantified using the big five inventory. Openness, conscientiousness, extroversion, agreeableness and neuroticism are the five broad traits studied as independent variables (IVs). Inventory holding cost, back order cost and bullwhip effect (Quantified) were studied as dependent variables (DVs). Conscientiousness also acted as a moderator besides being an IV and had a weak negative correlation with BWE and costs. Openness related positively to DVs in some relationships which were significant. Reason for this anomaly was found in the moderation/interaction of personality traits with conscientiousness. The important findings are that personality matters in complex decision making in a supply chain. Moreover, traits interact with each other. The best performers were those who were high on conscientiousness and openness.

Applications of the Kraljic-Tesfay portfolio matrix and the hyper-hybrid coordination in global supply chain analysis

This article proposed to show the limitations of transaction cost analysis (TCA) based on deep examinations of the causes of the Bullwhip effect. To analyse the potential causes of the Bullwhip effect, the author applied panel data regression models and seemingly unrelated regression models on the experimentally simulated data from beer distribution game. The best-fitted Cochrane-Orcutt autoregression recursive estimation result of the seemingly unrelated regression models prevails that the Bullwhip effects can be caused by both intra-organisational and inter-organisational coordination of the business partners in the supply chain. The effects of the intra-organisational coordination on the bullwhip effects showed the drawback of the existing theory of organisational coordination. Consequently, the author figured out, the solutions of the TCA are still insufficient to produce effective and efficient organisational coordination. In order to diagnose the drawbacks of the TCA, the author introduced a new type of organisational coordination called the hyper-hybrid (Tesfay-coordination) governance. Finally, the author has shown some of the applications of the hyper-hybrid coordination to solve complex problems of global supply chain analysis.

Applications of the Kraljic-Tesfay portfolio matrix and the hyper-hybrid coordination in global supply chain analysis

This article proposed to show the limitations of transaction cost analysis (TCA) based on deep examinations of the causes of the Bullwhip effect. To analyse the potential causes of the Bullwhip effect, the author applied panel data regression models and seemingly unrelated regression models on the experimentally simulated data from beer distribution game. The best-fitted Cochrane-Orcutt autoregression recursive estimation result of the seemingly unrelated regression models prevails that the Bullwhip effects can be caused by both intra-organisational and inter-organisational coordination of the business partners in the supply chain. The effects of the intra-organisational coordination on the bullwhip effects showed the drawback of the existing theory of organisational coordination. Consequently, the author figured out, the solutions of the TCA are still insufficient to produce effective and efficient organisational coordination. In order to diagnose the drawbacks of the TCA, the author introduced a new type of organisational coordination called the hyper-hybrid (Tesfay-coordination) governance. Finally, the author has shown some of the applications of the hyper-hybrid coordination to solve complex problems of global supply chain analysis.

What are causes of cash flow bullwhip effect in centralized and decentralized supply chains?

Bullwhip effect in supply chain is a phenomenon which can emerge in both inventory levels and replenishment orders. Bullwhip effect causes variations in cash conversion cycle (CCC) across cash flow of supply chain. As a result, it can lead to inefficiencies such as cash flow bullwhip (CFB). Due to negative impact of CFB on cash flow of supply chain, it can lead to a decrease in efficiency of supply chain management (SCM). That is why supply chain modeling is a proper start point for effective management and control of the CFB. This paper aims to analyze concurrent impact of causes of inventory bullwhip effect and effect of their interactions on CFB based on generalized OUT policy from aspect of CCC variance. To this end, first we develop system dynamics structure of beer distribution game as simulation model which includes multi-stage supply chain under both centralized and decentralized supply chains. Then, in order to develop CFB function, we design experiments in developed simulation model using response surface methodology (RSM). Results demonstrate that if each chain member uses generalized OUT policy as replenishment model, there still exists CFB in both chains and CFB largely stems from rationing and shortage gaming in both centralized and decentralized supply chain. In addition, when information on ordering parameters are not shared among members, parameters of downstream stage (i.e. retailer) are more important than parameters of upstream stage (i.e. manufacturer) in reducing CFB function.

Demonstrating the Effect of Supply Chain Disruptions through an Online Beer Distribution Game*

ABSTRACTThis article describes a classroom tool to teach the impact of supply chain disruptions and mitigation strategies based on information sharing and collaboration. The tool is an adaptation of the Beer Distribution Game, is easy to play, and can be hosted online or on local servers. The game considers several scenarios based on the location of the disruptions (i.e., upstream or downstream) and the information available to supply chain partners. Students play the roles of managers who make ordering decisions in a serial supply chain and experience decision‐making under disruptions.

A behavioral experiment on inventory management with supply chain disruption

Various operational strategies for mitigating supply chain disruption have been studied theoretically, but few studies have investigated behavioral decision-making in multi-echelon supply chains experiencing disruptions. We explore the effects of communicating disruption information in real-time to supply chain members using the beer distribution game in a controlled laboratory setting. Both upstream (manufacturer) and downstream (retailer) disruptions are independently considered, and in each of these scenarios, the difference between sharing and not sharing the disruption information is investigated. We find that supply chain disruptions may cause higher order variability when compared to the base case (no disruption). For a disruption at an upstream echelon, sharing the disruption information is found beneficial in reducing order variability and supply chain cost—upstream echelons experience more benefits from information sharing than downstream echelons. Therefore, we advocate that manufacturers share supply disruption information in real-time in order to benefit from a reduced bullwhip effect and its associated costs. For a disruption at a downstream echelon, sharing disruption information does not appear to have a significant benefit. Past studies have shown the importance of sharing downstream inventory information with upstream supply chain members. In the event of disruptions, our results demonstrate that sharing upstream disruption information with downstream members is beneficial.

“I’m not hoarding, I’m just stocking up before the hoarders get here.”: Behavioral causes of phantom ordering in supply chains

When suppliers are unable to fill orders, delivery delays increase and customers receive less than they desire. Customers often respond by seeking larger safety stocks (hoarding) and by ordering more than they need to meet demand (phantom ordering). Such actions cause still longer delivery times, creating positive feedbacks that intensify scarcity and destabilize supply chains. Hoarding and phantom ordering can be rational when customers compete for limited supply in the presence of uncertainty or capacity constraints. But they may also be behavioral and emotional responses to scarcity. To address this question we extend Croson et al.’s (2014) experimental study with the Beer Distribution Game. Hoarding and phantom ordering are never rational in the experiment because there is no horizontal competition, randomness, or capacity constraint; further, customer demand is constant and participants have common knowledge of that fact. Nevertheless 22% of participants place orders more than 25 times greater than the known, constant demand. We generalize the ordering heuristic used in prior research to include the possibility of endogenous hoarding and phantom ordering. Estimation results strongly support the hypothesis, with hoarding and phantom ordering particularly strong for the outliers who placed extremely large orders. We discuss psychiatric and neuroanatomical evidence showing that environmental stressors can trigger the impulse to hoard, overwhelming rational decision-making. We speculate that stressors such as large orders, backlogs or late deliveries trigger hoarding and phantom ordering for some participants even though these behaviors are irrational. We discuss implications for supply chain design and behavioral operations research.

Valuing Information in Complex Systems: An Integrated Analytical Approach to Achieve Optimal Performance in the Beer Distribution Game

Even seemingly simple systems can produce complex dynamics, which leads management professionals to develop tools for training, monitoring, and improving performance. Management simulators provide useful insights about human behavior and interactions, while computational and informational decision support tools offer opportunities to reduce inconsistencies, errors, and non-optimal human choices, particularly for complex systems that involve multiple decision makers, uncertainty, variability, and time. We use the context of a popular management simulator that teaches students about the bullwhip effect (i.e., the beer distribution game) to explore an integrated decision analytic, control theory, and system dynamics approach to the game that recognizes the value of available (imperfect) information and considers the value of perfect information to provide the optimal strategy. Using a discrete event simulation, we characterize optimal decisions and overall team scores for the situation of actual available information and perfect information. We describe our implementation of the strategy in the field to win the 2007 beer game world championship played at the 25th conference of the International System Dynamics Society. This paper seeks to demonstrate that better understanding of the system and use of available information leads to significantly lower expected costs than identified in prior studies. Understanding complex systems and using information optimally may increase system stability and significantly improve performance, in some cases even without better information than already available.

Modeling the Causes of the Bullwhip Effect and Its Implications on the Theory of Organizational Coordination

This article analyzes the potential cause of bullwhip effect using experimentally simulated data from a beer distribution game. The game represents a simple supply chain that consists of a factory, distributor, wholesaler, and retailer. The study used the bootstrapping estimation technique on ANOVA models, signal processing, and recessive autoregression estimation methods, which resulted in preliminary findings that confirmed that the bullwhip effect has different cost implications to various business partners in the supply chain. The inventory cost is higher in the upstream of the supply chain. Consequently, the stock-out cost is higher in the downstream of the supply chain. The generalization of the preliminary findings suggests that one way or another, the bullwhip effect attacks all business partners in the supply chain. Then, we tried to analyze the causes of the bullwhip effect. The Cochrane-Orcutt autoregression recursive estimation result showed that the bullwhip effect can be caused by intra- and inter-organizational coordination of the business partners in the supply chain. The effect of the intra-organizational coordination on the bullwhip effect showed the drawback of existing theory on organizational coordination. The analysis showed that in order to make the supply chain more efficient and effective a coordination type, named hyper-hybrid coordination, is introduced, which helps us to modify the Kraljic portfolio model. Finally, we have shown some applications of the hyper-hybrid coordination in the supply chain of agricultural products.