Applying a change-point control chart based on likelihood ratio to supply chain network monitoring

Abstract

In this paper, a supply chain network system is viewed as a serial-parallel multistage process; and the application of a change point control chart based on likelihood ratio is explored to monitor this system. Firstly, state-space modeling is used to characterize complexity of the supply chain network system. Then, a change point control chart based on likelihood ratio is built to trigger potential tardy orders in the system. A case study is illustrated to indicate that the change point control charts can effectively signal process mean shift, and accurately estimate the change point and the out-of-control stage in term of power of detection and the accuracy of estimation of change point. We also investigate the effect of misspecified parameters of state space equations on the performance of the change point control chart. The results show that the performance of the change point control chart is relatively stable.