Impact of Inventory Policies on Supply Chain Dynamics

Abstract

The fluctuations in the supply chains over time are of significance in research as well as industrial situations. The bullwhip effect which shows the dynamics in the supply chain is a well documented phenomenon. This article presents the importance of considering the inventory policies in supply chain planning to minimize the bullwhip effect. A similar work available in the literature by (Jakšic and Rusjan, 2008) has considered the effect of replenishment policies on the bullwhip effect, but has not considered the Work In Progress (WIP) inventory. We have done the performance analysis to show the role of work in progress inventory in supply chain policy planning. Our policy is named as “Viswanadh’s policy”, which will increase efficiency of supply chain. We have adopted the control engineering approach to find the system response of our policy. By comparing the system frequency response of both the policies, we found our policies to be better than their policies. Under the given circumstances the improvement in our policies was 15% and 5% respectively.

View PDF