On the evaluation of arborescent supply chains with inventory errors

Abstract

This paper addresses the impact of inventory errors on the performance of arborescent supply chains, characterized by the bullwhip effect. The inventory records inaccuracy is caused by a permanent shrinkage. Periodic inventory audits are used to control the consequences of the inventory records inaccuracy phenomenon. Different levels of shrinkage and different frequency of audits are considered in the analysis. The performance of the arborescent supply chain is compared with the performance of a classical serial supply chain in order to provide benchmarking. Data is obtained through multi-agent simulation. Results show that the impact of inventory records inaccuracy on the bullwhip effect is higher in the arborescent supply chain: (1) the arborescent supply chain is more vulnerable to inventory shrinkage than the serial supply chain, and (2) the adoption of periodic inventory audits is more beneficial in terms of bullwhip reduction in the arborescent supply chain than the serial supply chain.