Accession Number : AD0715002

Title :   Derivation and Simulation of an Ordering Rule for the Multi-Echelon Supply Chain.

Descriptive Note : Technical rept.,

Corporate Author : FLORIDA UNIV GAINESVILLE DEPT OF INDUSTRIAL AND SYSTEMS ENGINEERING

Personal Author(s) : Burns,J. F.

Report Date : AUG 1970

Pagination or Media Count : 39

Abstract : The paper investigates the dynamic response of a multi-echelon supply chain to various demands placed upon the system by a final consumer. When each supply point in the chain uses a typical linear decision rule for placing orders, it is shown that the system amplifies minor variations in consumer demand into major disturbances at higher echelons. This amplification is traced to two sources, one being a legitimate and unavoidable inventory adjustment and the other being an unwarranted 'false order' effect. A new decision rule is derived which automatically suppresses these false orders. The two decision rules are compared in a three-echelon simulation model, and the revised rule experienced fewer stockouts, maintained lower average inventory, and greatly reduced the amplification effect. (Author)

Descriptors :   (*INVENTORY CONTROL, MATHEMATICAL MODELS), MANAGEMENT PLANNING AND CONTROL, DECISION THEORY, SERVOMECHANISMS, STATISTICAL ANALYSIS, FLOW CHARTING, SIMULATION

Subject Categories : Administration and Management
      Operations Research

Distribution Statement : APPROVED FOR PUBLIC RELEASE