Friday , September 21 2018

Service Performance of Some Supply Chain Inventory Policies Under Demand Impulses

Subhash WADHWA
Professor, Department of Mechanical Engineering Indian Institute of Technology
Delhi, INDIA

Bibhushan & A. PRAKASH
Research Scholars, Department of Mechanical Engineering
Indian Institute of Technology Delhi, INDIA

Abstract:

This paper attempts to study the impact of impulsive demand disturbances on the service performance of some inventory control policies. The supply chain is modeled as a network of autonomous supply chain nodes. The customer places a constant demand except for a brief period of sudden and steep change in demand (called demand impulse). The service performance of some inventory control policies is studied under increasing number of demand impulses. It is found that the independent decision making by each node leads to bullwhip effect in the supply chain whereby demand information is amplified and distorted (as reflected by poor service performance). However, under a scenario where retailer places a constant order irrespective of the end customer demand, the service performance does not deteriorate along the supply chain. The service performance of all the supply chain nodes remains same when only the actual demands are transmitted by each node. The results also showed that the inventory policy which is best for one supply chain node is generally less efficient from a supply chain perspective. Moreover, the policy which performs poorly for one node can be most efficient for the supply chain. In a way, our results also provide a case for coordinated inventory management in the supply chain where all members prepare a joint inventory management policy that is beneficial for all the supply chain nodes.

Keywords:

Inventory Management, Supply Chain, Simulation, Impulse Demands.

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CITE THIS PAPER AS:
Subhash WADHWA, Bibhushan & A. PRAKASH, Service Performance of Some Supply Chain Inventory Policies Under Demand Impulses, Studies in Informatics and Control, ISSN 1220-1766, vol. 17 (1), pp. 43-54, 2008.