Abstract
Within automotive supply chains, instability of order schedules of original equipment manufacturers (OEMs) creates inefficiencies in suppliers’ production processes. Due to the market power of the OEM, first tier suppliers are not always able to influence the scheduling behavior of their customers. However, addressing the root causes of schedule instability, in particular the unreliability of suppliers’ production processes, can help to curtail short-term demand variations and increase the overall supply chain efficiency. To this end, we introduce a stylised assembly supply chain model with two suppliers and a single OEM. This supply chain can be disrupted by a shortage occurring at one of the two suppliers due to random machine breakdowns, what consequently creates dependent requirements variations affecting both the buyer and the other supplier. Therefore the paper at hand contains two main sections. At first, a simulation model is developed containing the said mechanism causing schedule instability. Secondly, a simulation study is carried out to derive managerial and theoretical implications accordingly.
Published Version
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