Classroom Scenario: Professor Gnivri Discusses Supply Chain Disruptions and the Beer Game as a Model to Understand Retailer Impact

Professor Gnivri

Context:

The escalating trade tensions between the United States and China are forcing a fundamental reshaping of global supply chains as companies scramble to adapt to an uncertain economic landscape. Primary warehousing provider Prologis reports a 20% dip in leasing activity as businesses delay supply chain decisions amid tariff volatility.

The immediate response from many retailers has been to frontload shipments ahead of potential tariff increases, with imports surging at major U.S. ports—up 28% at Long Beach and 9% at New York and New Jersey facilities. Target and Walmart have increased their inventories by 7% and 3%, respectively, highlighting this widespread strategy.

However, this inventory buildup represents a significant gamble as consumer confidence experiences its steepest three-month decline since 1990. Retailers now face a precarious balancing act: stockpile too little and risk shortages that erode customer trust; overstock while consumer spending drops and face painful discounting that damages profitability.

The impacts vary dramatically by sector. Toy manufacturers and holiday goods suppliers—with 80% of U.S. toys and 90% of Christmas items sourced from China—face particular vulnerability as production cycles for the winter holidays typically begin months in advance. Meanwhile, domestically focused industries, such as food and beverage, remain relatively insulated from these disruptions.

This classroom exercise utilizes the Beer Game to illustrate the consequences of higher tariffs, building upon the earlier retail inventory scenario. Each student’s question targets a specific outcome—oversupply, shortage, or equilibrium—allowing Professor Gnivri to explain how tariffs exacerbate supply chain volatility. The responses connect the game’s lessons (bullwhip effect, coordination, and demand misjudgment) to real-world retail challenges, making the discussion accessible and engaging in a classroom setting. 

Overview:

This simulated classroom exercise utilizes the Beer Game to illustrate the effects of higher tariffs, building upon the earlier retail inventory scenario. Each student’s question targets a specific outcome—oversupply, shortage, or equilibrium—allowing Professor Gnivri to explain how tariffs exacerbate supply chain volatility. The responses connect the game’s lessons— bullwhip effect, coordination, and demand misjudgment —to real-world retail challenges, making the discussion accessible and engaging in a classroom setting. 

Setting: 

A university lecture hall, Supply Chain Management 301, mid-semester. Professor Gnivri, a seasoned expert in logistics, stands at the front, wrapping up a lecture on the Beer Game. The topic shifts to real-world applications, focusing on how higher tariffs could disrupt supply chains, using the Beer Game as a framework. Three students raise their hands with questions about the potential consequences, referencing the retail inventory buildup scenario from the earlier discussion.

Characters:

Professor Gnivri: An engaging and knowledgeable professor who incorporates practical examples to explain complex concepts.

Student 1 (Maya): A curious economics major with an interest in the impacts of policy.

Student 2 (Liam): A business student who focuses on retail operations.

Student 3 (Sofia): A data science student intrigued by forecasting challenges.

Scene:

Professor Gnivri adjusts his glasses and points to a slide showing the Beer Game’s supply chain: retailer, wholesaler, distributor, brewery. The slide also mentions “Higher Tariffs” as a disruptor.

Professor Gnivri:

“So, class, we’ve seen how the Beer Game illustrates the bullwhip effect—small demand changes at the retail level can cause wild swings upstream. Now, imagine higher tariffs, such as those on imported goods, which would raise costs and delay shipments. This could mimic an ‘import drought,’ such as when retailers stockpile inventory to avoid shortages. Let’s connect this to the game. Questions?”

Maya raises her hand eagerly.

Maya: 

“Professor, if tariffs increase costs and slow imports, how does that affect retailers’ decisions in the Beer Game? Could it lead to the oversupply trap you mentioned?”

Professor Gnivri: 

“Great question, Maya! In the Beer Game, retailers order based on perceived demand and supply risks. Higher tariffs act like a delivery delay or cost spike, making retailers nervous about stockouts. Imagine you’re the retailer in the game, and you hear tariffs will delay imported electronics by weeks. You might order extra to build a safety stock, just as retailers are doing now to preempt an import drought. But if you overestimate consumer demand—say, people cut spending due to tariff-driven price hikes—you’re stuck with excess inventory. That’s the oversupply trap: high holding costs, tied-up capital, and forced discounts to clear stock. In the game, this happens when players overreact to small demand signals, amplifying the bullwhip effect. Tariffs just make the stakes higher by adding cost and delay pressures.”

Liam, scribbling notes, raises his hand.

Liam: 

“Okay, but what if retailers play it safe and don’t stock up? In the Beer Game, what’s the downside, and how do tariffs make it worse?”

Professor Gnivri: 

“Sharp thinking, Liam. In the Beer Game, under-ordering leads to stockouts—unmet demand that costs you sales and frustrates customers. If retailers, fearing tariff costs or weak demand, keep lean inventories, they risk a shortage spiral, especially if tariffs disrupt supply and consumers keep spending. Picture a retailer in the game who doesn’t order enough beer because they think demand will drop. Then, a festival spikes sales, and they can’t restock fast enough due to delivery lags. Tariffs amplify this by slowing imports and raising restocking costs—retailers might pay premiums to secure scarce goods, shrinking margins. In the real world, this could mean empty shelves, lost customers to competitors, and damaged brand loyalty. The game shows how under-ordering, without clear demand signals, can be as costly as overstocking.”

Sofia, tapping her laptop, raises her hand.

Sofia: 

“Professor, you said the Beer Game shows the importance of coordination. With tariffs causing disruptions, how can retailers use data to avoid these extremes and hit that balanced equilibrium you talked about?”

Professor Gnivri: 

“Excellent, Sofia—data is key! In the Beer Game, the bullwhip effect worsens because players lack shared information, reacting to incomplete signals. Tariffs add uncertainty, like fog over the supply chain, making demand forecasting tougher. To reach the balanced equilibrium—where inventory aligns with demand—retailers need real-time data and coordination. Think of a retailer using predictive analytics to track consumer trends, like spending patterns post-tariff hikes, or collaborating with suppliers to monitor import delays. In the game, if the retailer shares demand forecasts with the wholesaler and distributor, everyone orders smarter, reducing swings. In practice, retailers like Amazon use AI to predict demand and adjust inventory dynamically, avoiding both gluts and shortages. With tariffs, data-driven retailers can diversify suppliers—say, sourcing from domestic producers—or use promotions to steer demand, keeping margins intact. The game teaches us: better information, less chaos.”

Professor Gnivri smiles, scanning the room.

Professor Gnivri: 

“Any more questions? The Beer Game shows us that tariffs, like any disruption, test how well you read the consumer and coordinate your supply chain. Misjudge either, and you’re in trouble—whether it’s too much beer or not enough!”

The class buzzes as students jot down notes, inspired to dig deeper into supply chain resilience.

References:

1. MIT Sloan Beer Game Online 

DEVELOPER

John Sterman

2. Bullwhip Effect: Meaning, Example, Impact

By Nathan Reiff

3. Lu, Changxiang. (2021). Research on Bullwhip Effect Management in Supply Chain Based on System Dynamics. Journal of Physics: Conference Series. 1910. 012034. 10.1088/1742-6596/1910/1/012034.