A supply network

2 Order Variability in a Serial Supply Chain The Bullwhip Effect 

But suppose customer demand were to increase suddenly by K units. For simplicity, suppose Node 1 changes its demand forecast to jx + K. It would immediately order to satisfy the current demand and to fill the 

What would happen if all nodes shared the downstream demand information In such a case, every node would see the underlying demand. Thus, the order adjustment would cover the demand faced and would not be confused with the pipeline inventory increase. Thus, the order faced by node n would be -b K (L + S)n +1). The increase in order due to lack of demand information can thus be described as 

This increase reflects the exponential growth in orders in response to lack of information in a fragmented supply chain. As mentioned in Chapter 1, this is called the bullwhip effect. Thus, even in a serial supply chain, lack of transparency can create undesirable volatility even when each entity behaves optimally, thus generating the bullwhip effect. The consequences of such volatility are increased capacity, inventory, delivery lead time, and costs. 

3 Distribution Supply Chains Risk Pooling and Inventory Impact 

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Jang Y, Jang S, Chang B, Park J (2002) A combined model of network design and production/distribution planning for a supply network. Computers Industrial Engineering 43 (1-2) 263-281... 

The objective function of a supply network design model can either minimize costs or maximize profits. In practice the production function is often required to assume that all forecasted demands have to be met. In this constellation cost minimization and profit maximization lead to identical results and consequently cost minimization models are used. From an economic perspective this simplification can be justified in cases where a high share of fixed costs allows the assumption that any product sale con-... 

Consequently, currently existing supply networks of alternative fuels tends to concentrate in those cases where the need for a supply network to be built does not imply very high costs. This is the case for biofuels sharing existing supply networks while enjoying similar physical and chemical characteristics and to a different extent, NG, already relatively wide spread for industrial and domestic consumption. In the case of public transport operators (UPT), these may enjoy by itself sufficient scale to allow for dedicated supply - for example, a NG storage facility in central maintenance and refueling premises of a bus operator. 

The proposed approach is illustrated with a supply network to deliver gasoline from a refinery to one or two terminals through various routes by two means of transportation, i.e., pipelines and tanker-trucks. The optimal and near-optimal networks in the ranked order of cost are obtained for the two examples, one depicted in Figure 1 and the other depicted in Figure 2. Conventional and P-graph representations of an operating unit identified are provided in Table 1 as an example. 

Ettl, M., Feigin, G., Lin, G. Y., and Yao, D. D. (2000), A Supply Network Model with Base-Stock Control and Service Requirements, Operations Research (forthcoming). 

Let s start the discussion with definitions. When the supply chain is extended to a network of trading partners, it is termed a supply network. When the emphasis of this extended supply chain shifts from cost to value, it is called a value chain. When it becomes more strategic to the company, focused outside-in to drive value-based outcomes, it is termed a value network. 

In many industries (automotive, aerospace, shipbuilding) product development usually takes place in global development partnerships. Original equipment manufacturers (OEM) conduct the development of new products at many locations in several countries across the world. Furthermore, a variable number of external service providers and suppliers take part in individual projects (see Chap. 7). Most relationships in a supply network which acts like a virtual enterprise are temporary, extinct by the end of project, while the contract can be renewed or expire (Fig. 18.2) [17]. In the latter case today s a project partner can become tomorrow s harshest competitor [1]. 

Luh PB, Ni M, Chen H et al (2003) Price-based approach for activity coordination in a supply network. IEEE Trans Robot Autom 19(2) 335-346... 

Alternatively, the optimization of a supply network could be performed using the simulation model directly or using a hybrid optimization-simulation model, which invokes the simulation model on each optimization trial, and is computationally challenging. 

Supply networks are in effect a complex web of interconnected nodes and links . The nodes represent the entities or facilities such as suppliers, distributors, factories and warehouses. The links are the means by which the nodes are connected - these links may be physical flows, information flows or financial flows. The vulnerability of a supply network is determined by the risk of failure of these nodes and links. 

A supply network comprises interconnected entities that exchange information, products, and services through procurement and transformation of resources to goods and services (Harland et al. 2001 Choi and Rungtusanatham 2001). The... 

The structure of a supply network can be described in terms of the pattern of connectivity, number of tiers in the network, and the position of the company in the network (upstream/downstream). Burt et al. (2013) discuss how the structure of the network and where a company and its contacts are positioned in the network can influence the company s profitability. 

The connectivity pattern determines the paths, connecting any two suppliers, oti which the goods, informatiOTi, and cash may flow in the network. Three different connectivity patterns are usually present in a supply network dyadic, multiple dyadic and multi-channel (Ring and Van de Ven 1992). Dyadic network (one-to-one) refers to the interaction between exactly two companies the path cramects a supplier to another supplier or to a customer. Multiple-dyadic network refers to the interaction of raie company with several other companies (one-to-many or many-to-one). This can take the form of N suppliers and one service provider, or one supplier and N retailers. An example is the relationship between an airline and several independent travel agents, or between a car manufactmer (such as GM) and its multiple dealers. A multi-channel network denotes relationships in which several companies interact with several other companies (many-to-many). Possible interactions include M suppliers linked to N retailers. These connectivity patterns, in a 2-tier network, are shown in Fig. 4.2. 

In a supply network, a critical issue is how to coordinate the decisions made by multiple companies. The coordination scheme plays an important role in integrating the network, and it requires sharing of information across boundaries. Two of the key determinants of coordination structure are the decision rights and information architecture. 

In general, a supply network can be defined as comprising n i =, n) value-adding tiers with = 1, m,) options to choose from, at tier i, so that the number of possible design alternatives for the supply network would be JJ i some of... 

In a supply chain, materials flow from upstream to downstream. Demand information from the end-customer flows in the opposite direction. A focal hrm is positioned within a supply network, with tier 1 suppliers and tier 1 customers its immediate neighbours. Material flow measures the quantity of material that passes through a given network per unit of time. 

A supply network is a system in which each organisation is linked to the others. Therefore the overall performance of the network results from the combined performance of the individual partners. 

What does flow mean in a supply chain context Explain how material flow relates to information flow in a supply network. 

The logistics dimension of internationalisation conjures up a vision of parts flowing seamlessly from suppliers to customers located an5where in the world, and a supply network that truly spans the entire globe. Often basic products such... 

Key issue How do you go about measuring time in a supply network ... 

Key issues What are the key steps in planning and executing material flow and information flow within the focal firm What are the key steps in planning and executing material flow and information flow between partners in a supply network What are the implications for planning and controlling the supply chain as a whole ... 

In a supply network, no firm is an island that stands on its own. Nor does it compete on its own. A focal firm depends on its network partners for components to assemble, for products to sell, for the movement of goods, and so on. While Part Two focused on the central logistics task of achieving responsiveness to customer demand, most firms cannot achieve this without the support of their network partners. Complete vertical integration of an industry is unusual today - although vertical retailers have developed a similar strategy, as we saw in Case study 4.4. Functional specialisation of suppliers on those parts of the value proposition in which they excel, coupled with integration into the supply network, is more common. 

It is hardly surprising that it is extremely difficult to achieve this integration across the whole of a supply network. There are significant implications for small businesses, which have difficulty justifying the cost of the IT system and the associated training. These set-up costs can deter new companies with irmovative products from being able to supply. Recent developments in Internet-based applications are helping to resolve this situation because the implementation and data transfer costs are much lower. 

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