Steel supply chain management by simulation modelling

Abstract

Purpose

The aim of this paper is to propose a simulation study of the “steel supply chain” to demonstrate the effect of inventory management and demand variety on the bullwhip effect mitigation.

Design/methodology/approach

The relevant literature is reviewed, and then the simulation model proposed.

Findings

This study identifies reasons for sharing information under varying levels of demand and some variants, and demonstrates the benefits of mitigating the bullwhip effect by applying a design of experiment. It is shown that the information sharing is able to mitigate the bullwhip effect in the steel supply chain by extending the order interval and minimising the order batch size.

Research limitations/implications

This study explores the factors associated with the bullwhip effect. This research is focused on built‐to‐order simulation, so the results are only oriented on the basis of orders; hence a simultaneous order‐ and forecast‐based steel supply chain should be carried out in the future.

Practical implications

This framework is expected to provide a convenient way to measure the optimum inventory level against a limited level of demand uncertainty, and thus enterprises can promote the supply chain coordination.

Originality/value

An innovative simulation model of the “steel supply chain” is proposed, which includes information sharing in the simulation model. Furthermore, dynamic scheduling is shown by applying a continuous ordering and order prioritization rule to replace traditional scheduling methods.

Citation

Sandhu, M.A., Helo, P. and Kristianto, Y. (2013), "Steel supply chain management by simulation modelling", Benchmarking: An International Journal, Vol. 20 No. 1, pp. 45-61. https://doi.org/10.1108/14635771311299489