Title: Capacity constrained supply chains: a simulation study

Authors: Salvatore Cannella, Elena Ciancimino, Adolfo Crespo Marquez

Addresses: Faculty of Engineering, University of Palermo, viale delle Scienze, Parco d'Orleans, 90128 Palermo, Italy. ' Faculty of Engineering, University of Palermo, viale delle Scienze, Parco d'Orleans, 90128 Palermo, Italy. ' School of Engineering, Department of Industrial Management, University of Seville, Camino de los Descubrimientos s/n., 41092 Seville, Spain

Abstract: This paper explores the relationship between constrained capacity and supply chain performance. Six capacity constraint levels are studied under different inventory policies and information sharing strategies. The results suggest that an increment of production capacity, used in industry as local approach to manage increasing incoming orders, does not necessarily imply an improvement in customer service. In presence of information distortions, the strategy of augmenting production capacity can lead to satisfy at a higher cost an over-estimated market demand. The collaborative practices provide bullwhip effect dampening and inventory stability, and increase the ability of the structure to avoid this risk.

Keywords: multi-echelon; centralised supply chains; supply chain management; SCM; limited capacity; bullwhip effect; demand amplification; order policy; periodic review; order-up-to; APIOBPCS; smoothing replenishment; EPOS; supply chain metrics; customer service level; continuous time differential equation; supply chain constraints; constrained capacity; supply chain performance; inventory stability; supply chain collaboration.

DOI: 10.1504/IJSPM.2008.022075

International Journal of Simulation and Process Modelling, 2008 Vol.4 No.2, pp.139 - 147

Published online: 17 Dec 2008 *

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