Worried about why business is underperforming the economy? Play the 'beer game', as they do at MIT's Sloan School of Management. Participants play retailer, wholesaler and brewer. Beer sales suddenly double, so the retailer reacts. Because of time-lags between doubling orders and delivery, his stock dwindles; he doubles again. The wholesaler reacts likewise, running out - eventually raising orders 20-fold. But as orders vanish, both become overstocked. By operating in isolation, they turn a benefit into a catastrophic chain reaction. Beer game players learn: 1, to forecast better by tracking ultimate customers; 2, to collaborate with others; and 3, that they aren't so smart. Placing orders to cover those received is simple but suboptimal; three-quarters of players do worse.
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