Impact of Capacity Constraints on the Dynamic Response of Two Level Supply Chain

Matloub Hussain (), Mehmood Khan () and Hussein Saber ()
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Matloub Hussain: Abu Dhabi University
Mehmood Khan: Abu Dhabi University
Hussein Saber: Abu Dhabi University

A chapter in LISS 2014, 2015, pp 201-206 from Springer

Abstract: Abstract This paper investigates the impact of capacity constraints on the stability boundaries of two tier supply chain. System dynamic simulation using iThink Software has been applied to explore the impact of different levels of capacity constraints on the Order Rate and Actual Inventory of Automatic Pipe Line Inventory and Order Based Production Control System (APIOBPCS). When manufacturer has capacity level of 1.33 over the mean demand, the factory (farthest echelon) should be confident in dealing with the 20 % increase in demand and this situation has been named as the “Leading Capacity Strategy”, where the manufacturer can use excess capacity to absorb sudden increases in demand. This research gives supply chain operations managers and designers a practical way to develop understanding of capacity constraints at different echelons and to take better decisions about their capacity level.

Keywords: Supply chain dynamics; Capacity constraints; Simulation; APIOBPCS (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-662-43871-8_31

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DOI: 10.1007/978-3-662-43871-8_31

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