A System Dynamics Model of Cross-Chain Inventory Control for Cluster Supply Chain with Third-Party Logistics

Abstract

Cluster supply chain is the network of supply chains based on localization and integration in industrial cluster. It is often that multiple linear supply chains in the same cluster are interactive and need to collaborate with each other. This paper considers the inventory collaboration control across two linear and two-echelon supply chains with a third party logistics provider （TPL）. Based on the theory of Automatic Pipeline, Inventory and Order Based Production Control System (APIOBPCS) and system dynamics, a VMI&TPL-APIOBPCS model is proposed to simulate the process of replenishment and dispatching when the TPL implements Vendor Managed Inventory (VMI) to connect the two supply chains. The model provides an effective method to decrease the total inventory of two supply chains, make the production rate smoother and reduce the Bullwhip effect.