Exploring the Impact of Network Structure and Demand Collaboration on the Dynamics of a Supply Chain Network Using a Robust Control Approach

Abstract

A supply chain network might exhibit complex dynamics in the face of increasingly volatile and uncertain environment. The impact of network structure and collaboration on the dynamics and robustness of supply chain network, however, remains to be explored. In this paper, a unified state space model for a two-layer supply chain network composed of multiple distributors and multiple retailers is developed. A robust control algorithm is advocated to reduce both order and demand fluctuations for unknown demand. Numerical simulations demonstrate that the robust control approach has the advantage to reduce both inventory and order fluctuations. In the simulation experiment, it is interesting to notice that complex network structure and collaborations might contribute to the reduction of inventory and order oscillations. This paper yields new insights into the overestimated bullwhip effect problem and helps us understand the complexities of supply chain networks.