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Articles

Enhancing flexibility in supply chains: Modelling random demands and non-stationary supply information

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Pages 812-822 | Received 22 Nov 2006, Accepted 02 Mar 2009, Published online: 22 Jul 2009
 

Abstract

The faster parts, information and decisions flow through supply chains, the faster they can respond to customer needs and to the demands of the market. In the last decade, interest has been focused on the volatile market conditions and thus, the issue of demand information sharing is paid much attention. The principal objective of this study is to understand the potential values of sharing timely supply information with random demands at retail outlets. This paper proposes a theoretically rigorous framework for the modelling, qualitative analysis and computation of solutions to supply chain network problems within an equilibrium context in the case of non-stationary demands and information associated with supply chains. More specifically, a mathematical model to understand the potential values of sharing timely supply information with random demands is presented in this research. In dynamic supply chain networks, an unforeseen change may occur at any material and gradually influence the material flow at downstream stages with time. Therefore, in this paper, the impact of the change from the time aspect and the expenditure aspect is quantified respectively. By implementing the proposed algorithm, a participant at the downstream stage can figure out how long and how much the change may impact on its own performance just when the change occurs on the upstream stage. The aim of this research is not only to demonstrate the existence of bullwhip effect, but also to quantify it, i.e. to quantify the increase in variability at each stage of the supply chain and derive the market equilibrium conditions. Efficacy of the proposed approach is demonstrated with an illustrative numerical example.

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