1 Introduction
2 Supply Chain System Model
2.1 Structure Model and Operating Mechanism of the Supply Chain System
2.2 Heuristic Ordering Policy
Symbol | Description |
---|---|
t
| Time or period |
\(\hat{D}_{t}\)
| The expected demand |
\(D_{t}\)
| The actual demand i.e. the incoming orders |
\(I_{t}\)
| The actual inventory level |
\(I_{t}^{*}\)
| The desired inventory level |
\(AI_{t}\)
| The adjustment for the inventory level |
\(SL_{t}\)
| The actual supply line (orders placed but not yet received) |
\(SL_{t}^{*}\)
| The desired supply line |
\(ASL_{t}\)
| Adjustment for the supply line |
\(O_{t}\)
| Order quantity |
\(\delta\)
| The desired coverage |
\(\gamma\)
| The expected (or perceived) lag between ordering and acquisition of goods |
\(\theta\)
| A constant which determines how fast expectations are updated, \(0 \le \theta \le 1\) |
\(\alpha_{I}\)
| Rate at which the discrepancy between actual and desired inventory levels is corrected, \(0 \le \alpha_{I} \le 1\) |
\(\alpha_{SL}\)
| The rate at which the discrepancy between actual and desired supply line is corrected, \(0 \le \alpha_{SL} \le 1\) |
2.3 Dynamics Model of the Supply Chain System
Symbol | Description |
---|---|
I | The actual inventory level of goods |
B | Backlog of orders |
IS | Incoming shipments |
OS | Outgoing shipments |
SL | The actual supply line |
IO | Incoming orders |
OP | Orders placed |
ED | The expected demand |
PR | Production rate |
PD1, PD2 | Production delay of one period and two periods |
COR | The exogenous customer order rate |