Supply-chain modelling and control under proportional inventory-replenishment policies

Authors:
C. I. Papanagnou;G. D. Halikias
Affiliations:
Control Engineering Research Centre, School of Engineering and Mathematical Sciences, City University, London, UK;Control Engineering Research Centre, School of Engineering and Mathematical Sciences, City University, London, UK
Venue:
International Journal of Systems Science - Production Coordination and Inventory Policies
Year:
2008

Citing 5
Cited 0

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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.