A System Dynamics Approach to Decision Process in Supply Chain

The era of fierce competition and globalization, have created an urgency to focus on a change from managing individual functions to integrating activities into key supply chain processes. Supply chain management is now seen as a governing element in strategy and as an effective way of creating value for customers. This paper proposes a system dynamic approach for modeling and analysis of supply networks based on information flow and dynamic decision making in order to decrease bullwhip effect and increase customer satisfaction. This framework models the information and material flows within the supply chain, and utilizes them to capture its dynamic behavior. To illustrate the feasibility and dynamism of the approach, two scenarios are designed and then the simulated results are analyzed to assist decision makers through identifying costs and benefits.