Simple Supply-Chain Model Example

This is a simple model of a well-studied supply-chain system, called Beer-Game. The Beer Game was developed at MIT in the 1960s to study the dynamics of a supply chain, as part of Jay Forrester's research on industrial dynamics. There are five classes of players in this version of the Beer Game: retailers, distributors, brokers, customers, and manufacturers. The players link to form a supply chain which delivers beer to customers through a system of orders and deliveries. The players are not in competition -- they work as team to produce the lowest possible costs.

For each participant, there is a cost penalty of $1 for each case of beer held in inventory each week. To reduce these costs, agents attempt to keep their inventories small. However, there is another, larger cost that "competes" with keeping a small inventory. For each customer order that cannot be immediately filled (due to low inventory), a cost penalty of $2 is assessed each week.

Customer demand is variable. There is a time-lag for all transactions. It takes one week for orders to be processed up the chain, and it takes two weeks for deliveries to be made down the chain. The result is that orders of beer made to satisfy changes in customer demand don't execute fast enough for retailers to accurately react to customers.

In CSIM, an agent model is used to represent each participant. Each agent has only local information. Agents do not sense the the demand, back-orders, or inventories of other agents. Communication is accomplished only through the placement of orders and receipt of deliveries. The supply-chain diagram of Figure 1 shows the path of orders and shipments.

Figure 1 - Supply chain diagram.

Each players starts with nominally 12 cases (12 beers per case for 144 beers), and initial throughput is 4 cases per week. Figure 2 below shows an example output plot. It is interesting to alter the inventory amounts or supply strategies of the agents to see variations in the resulting dynamics.

Figure 2 - Example output plot.

Download example model:


 View Models:
  gui supplychain.sim
  (Or: edit supplychain.sim)
 Build Simulation:
  Tools/ Build Simulation
  (Or:  csim supplychain.sim)
 Run Simulation:
  Tools/Run Simulation
  (Or:  ./sim.exe)
 View Results:
  xgraph factory.dat distributor.dat retailer.dat