A systems-perspective study of the performance of different supply chain inventory models

by 1969- Knight, Craig Stephen

The purpose of this dissertation was to contrast the performance of two different categories of inventory models used by organizations in supply chains. The two categories of inventory models to be contrasted were either consistent with a traditional inventory model (e.g., the min-max) or with a strategic buffering methodology derived from distribution applications of Goldratt’s Theory of Constraints. A significant amount of research has been conducted on supply chains consisting of two echelons (e.g., a supplier and some number of retailers that are served by the supplier); however, far less research has explored the behavior of longer supply chains (i.e., those having more than two echelons). This research makes a contribution to the understanding of the behavior of supply chains consisting of more than two echelons. In this research, a simulation model is presented that represents the flow of inventories of multiple items in a four echelon supply chain. Results from employing the simulation model are presented and discussed. The behavior of the simulated supply chain, using both categories of inventory models, is then analyzed. The results of the simulation showed that the use of a strategic buffering inventory model can provide performance that is superior to that of a traditional inventory model. However, strategic buffering must be implemented correctly in order to achieve this improvement in performance, as there are ways of implementing strategic buffering that lead to lower performance than that achieved by the traditional inventory model.