Enhancing supply chain performance with improved order-control policies

Abstract

This article takes up the study of the dynamics of a single product in a prototype three-stage supply chain system, at the downstream warehouse end of the chain, under a responsive chain strategy. The dynamics under various ordering policies and the parameters which will yield desired responses are systematically analysed, both for deterministic and stochastic systems. Higher-order control policies are then proposed and analysed. The considered key performance criteria are the permanent inventory deviations from the desired levels, or the offset, the maximum dip in inventory, the ‘undershoot’, the damping effect and decay rates, and the duration of time in the negative region, for deterministic systems; and additionally, the inventory variance for stochastic systems. It is shown that the disadvantages of the conventional (proportional-integral-derivative) control policies, like large negative deviations, low decay rates, and high inventory variance, can be overcome by the use of higher-order control policies proposed herein.

Keywords:

• supply chains
• ordering policies
• discrete-time dynamics
• higher-order control schemes

Acknowledgement

The author would like to thank the three reviewers for their detailed comments and suggestions, the incorporation of which has substantially enhanced the quality and presentation of the article.