THE STUDY OF SUPPLY CHAIN INVENTORY STRATEGY UNDER BTO PRODUCTION ENVIRONMENT

ABSTRACT

Since the rapid change in industry environment, the academic and industry proposed the concept and procedure to solve the problems of supply chain management (SCM). SCM is often affected by the production and inventory strategy and it has the information distortion. This is called bullwhip effect. The major causes of bullwhip effect include time lag, supply chain level, inventory decision, batch production and order, forecast error, and price fluctuation. The results of these causes will response on the inventory of each level of supply chain. The purpose of this paper is to study the bullwhip effect influenced by two inventory strategies, (s,S) and Vendor Management Inventory (VMI), under BTO production environment. In this paper, the bullwhip effects, such as fluctuation uppermost point, fluctuation lowest point, fluctuation stable time, upstream demand enlarge ratio, total fluctuation stable time and total enlarge ratio, are analyzed. The system dynamics models of the BTO production strategy are constructed, and the inventory strategies are expressed by the model parameters. The system dynamic models are tested by steady state test, step test, seasonal fluctuation test, and real data test. Then, the simulation results are computed based on this model in order to find optimal policy combination. This optimal policy combination can be acted as reference for SCM decision-maker.

Keywords:

• supply chain management
• bullwhip effect
• system dynamics
• VMI
• BTO