City Research Online

Abstract

A novel state-space model of a multi-node supply chain is presented, controlled via local proportional inventory-replenishment policies. The model is driven by a stochastic sequence representing customer demand. The model is analysed under stationarity conditions and a simple recursive scheme is developed for updating its covariance matrix. This allows us to characterise the ‘bullwhip effect’ (demand amplification) in the chain and to solve an optimisation problem for a three-node model involving the minimisation of inventory subject to a probabilistic constraint on downstream demand. Finally, issues related to estimation schemes based on local historical data are briefly discussed.

Publication Type:	Article
Additional Information:	This is an Accepted Manuscript of an article published by Taylor & Francis in International Journal of Systems Science on 19 May 2008, available online: http://www.tandfonline.com/10.1080/00207720802090898
Publisher Keywords:	bullwhip effect, state-space model, supply chain, covariance matrix estimation, information-sharing
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Departments:	School of Science & Technology > Engineering
SWORD Depositor:	Symplectic Administrator

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