Modelling, simulation and analysis of control mechanism of a dynamic supply chain system considering supply-price trade-off, using control theory

Purpose – The objective of this work is to develop a model that can be used for simulation of different parameters including price, subjected to different control strategies. Design/methodology/approach – The entire supply chain can be modelled by combining the transfer function into a closed loop system. The transfer function of each entity in the supply chain can be obtained by using the control theory tools. The model can be approximated as a linear discrete system with various operating constants, like lead time, price, order policy and supply. Findings – The continuous replenishment ordering policy for a distribution node in a supply chain was analyzed using the z-transform. Characteristic equations of the closed loop transfer function are obtained. The bullwhip (BW) effect is analyzed. Study proves that the BW effect is in evitable if the standard heuristic ordering policy is employed with demand forecasting; also the paper analysed price supply trade-off for dynamic demand and supply. Simulation results show that BW is less in PI and simple p-only with cascade control. Robust control and PD, PID control results are not shown in this literature, and it is subject to further research. Originality/value – Research is original, it can be applicable in today's dynamic world, due to globalization, it is necessary to have a automated machine that can handle most of supply chain decision.