🍺

THE BEER GAME

Why a tiny change in demand creates total chaos

In the 1950s, MIT professor Jay Forrester invented this deceptively simple game. Four players manage a beer supply chain—a retailer, a wholesaler, a distributor, and a brewery. Consumer demand makes ONE small change—and the entire system goes haywire. MBA students, CEOs, and even professional inventory managers all produce the same wild oscillations. Why?

Speed

Weeks

Demand Step @

Ship Delay

Demand

Info Sharing

vs. Rational

Presets

🍺 The Supply Chain 🍺

💬

Press Play to start the simulation. Consumer demand starts at 4 cases per week…

💡 Key Insight

The oscillations are NOT caused by the demand change. They're caused by the feedback loop between human decision-making and time delays. The demand changes once and stays there—but the system never settles down. This is why Beinhocker argues that business cycles might be endogenous, not caused by external shocks.

🎓 Real result: When MIT tested this with professional supply chain managers, they did just as badly as random MBA students! The bullwhip effect isn't about skill or experience—it's a structural property of the system itself.