An extension of the supply chain model which calculates relevant costs: holding, ordering, and shortage.
- Holding costs based on the amount of stock they contain.
- Ordering costs are based on the amount of stock an agent is purchasing from its supplier.
- Shortage costs are incurred whenever a supplier cannot deliver an order.
The chain consists of a manufacturer, distributor, wholesaler, retailer, and customer demand. Each step agents place and attempt to fulfill orders to the next piece of the supply chain.
As demand fluctuates, reactive decision-making in the model quickly demonstrates the shortcomings of decision-making with local information and no global information, as links in the chain fail to deliver, and begin to develop large backlogs and then over-compensate for them.
Meta
Licensed under
MIT License