Modeling and analyzing a simple multi-stage supply chain using advance demand information

Abstract

In a production system using advance demand information, the advance demand information is sent to an upstream company a certain period of time before production, and the firm-order information is sent just before production. Unfortunately, upstream companies are frequently burdened with excess inventory and late deliveries. Therefore, it is necessary to analyze the effect of the variable factors, such as demand fluctuation and the gap between the advance demand information and the firm-order information. The model was based on the following three steps. First, considering a supply chain consisting of four companies, suppliers can be classified into three types, according to the timing of the firm order and production. Second, the supply chain consists of a combination of three types of suppliers, depending on the timing of the sending firm order. Finally, the production-activity structure for each type of supplier was modeled. Then, they were formulated and implemented as an analysis simulator. Using this simulator, several case studies were investigated. As a result, it was confirmed that the bullwhip effect was increased by the sudden fluctuation of demand, especially when the demand increased. In addition, the supplier whose daily production numbers and stock quantity fluctuated was drastically changed by the gap between the advance demand information and the firm order was identified.

Keywords

• supply chain
• advance demand information
• bullwhip effect
• simulation
• modeling
• standard deviation ratio