System dynamics application to supply chain management: a review

Abstract

The paper is a review of system dynamics (SD) as applied to supply chain management (SCM). It provides valuable insight and understanding of the characteristics in supply chain (SC). Paper discusses SD applied to SC from the conceptual model proposed by Forrester in 1958, industrial dynamics study and applications of SD to various facets of SCM such as inventory management, international supply chain management (ISCM), virtuous and vicious cycles in ISCM, demand amplification, supply chain design, participative business modeling, information visibility in SCM etc. The review should also be able to enhance the use of SD in the field of social sciences that are far more complex than the technological systems. Moreover, social behaviors lose reality if simplified to less than fifth order non-linear dynamic systems. Review brings to fore quantitative justifications for validation of various social models proposed and overcome the deficiency in mental models and thus establish a two-way communication between mental and simulation models.