Analyzing the Lead Time and Shipping Lot-Size in a Chaotic Supply Network

Abstract

Supply network issues recently have attracted a lot of attention from industrial practitioners and academics worldwide. Supply networks are highly complex systems. The oscillations in demand and inventory as orders pass through the system have been widely studied in literature. Studies have shown that supply networks can display some of the key characteristics of chaotic systems. Chaos theory is the study of complex, nonlinear, dynamic systems; therefore it can be useful for studying the dynamics of supply networks. In this paper the authors implemented a system dynamic approach and simulated a chaotic multi-level supply network. The authors analyzed the effects of decision parameters, delivery lead time and shipping lot-size on chaotic behavior of the whole supply network. The simulation revealed that an increment in lead times or shipping lot-size has a similar impact on chaotic behavior of the system and reduces the chance of chaotic behavior occurrence.