A System Dynamics Model For The Simulation Of A Non Multi Echelon Supply Chain: Analysis and Optimization Utilizing The Berkeley Madonna Software

In today’s global market, managing the entire supply chain becomes a key factor for a successful business. World-class organizations realize that non-integrated manufacturing and distribution processes together with poor relationships with suppliers and customers are a huge limit for their success. One of the most important aspect affecting the performance of a supply chain is the management of inventories. Inventory management in the supply chain system is quite a complex issue because demand at the upstream stage is dependent on orders from the downstream stage, and the final downstream stage receives orders from the market in uncertain conditions. Uncertainty is one of the major obstacle which limits the creation of an effective supply chain inventory model, able to optimize times and costs.Being the management of a complex inventory model too difficult to analyze with traditional analytical mathematical methods, computer simulation is widely used to study this kind of problems. This paper has the goal of modeling a single echelon supply chain and optimizing its inventories levels so to reduce the bullwhip effect and consequently minimize the supply chain costs. The supply chain here proposed consists of five stages – customer, retailer, wholesaler, distributor and factory – and its modeling is carried out through a system dynamics approach, utilizing the Berkeley Madonna software.