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Reducing the bullwhip effect in a supply chain network by application of optimal control theory. (English) Zbl 1414.49043
Summary: Controlling the bullwhip effect and reducing the propagated inventory levels throughout the supply chain layers has an important role in reducing the total inventory costs of a supply chain. In this study, an optimal controller that considers demand as control variable is designed to dampen propagated inventory fluctuations for each node throughout the supply chain network. The model proves to be very useful in revealing the dynamic characteristics of the chain and provides a proper interface to study decisions taken into account at each node of the supply chain in different periods by decision makers (DMs). In the proposed approach, two feedback loops and online updated values of net stock quantities are used for calculation of the orders. To investigate the efficiency of the proposed approach, a real case of bicycle industry is conducted. The acquired results justify the efficiency of the proposed approach in controlling and dampening the bullwhip effect and reducing inventory levels, net stock quantities and inventory attributed costs throughout the supply chain network layers.
MSC:
49N90 Applications of optimal control and differential games
37N40 Dynamical systems in optimization and economics
47N10 Applications of operator theory in optimization, convex analysis, mathematical programming, economics
78M50 Optimization problems in optics and electromagnetic theory
Software:
DYNAMO
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