Abstract
Abstract The application of system dynamics models to supply chains is reviewed. The most profitable area for system modelling and design concerns the demand amplification which is frequently observed in the medium-term operation of individual businesses, which behaviour is one manifestation of the Law of Industrial Dynamics. One cause of this amplification is the time delay incurred by both ‘value-added’ and ‘idle’ operations throughout the supply chain. Hence the management-inspired drive to reduce all cycle times throughout the business is also well directed from the total systems viewpoint, as is the removal of intermediate echelons from within the chain. However, the use of system dynamics models, as well as providing qualitative forecasts of predicted performance improvement from re-design, also enables the identification of more subtle mechanisms for achieving this objective. By means of an industrial example, it is shown that a significant contributory factor to demand amplification is interaction...
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