Economic Engineering for Supply Chain Management

Economic Engineering for Supply Chain Management: Mitigating the Bullwhip Effect Using PID Control

Dolman, Roemer (TU Delft Mechanical, Maritime and Materials Engineering)

Mendel, M.B. (mentor)
Hutters, C. (graduation committee)
Mohajerin Esfahani, P. (graduation committee)

Delft University of Technology

Mechanical Engineering | Systems and Control

2022-05-24

The purpose of Supply Chain Management (SCM) is to maximize and stabilize the flow of goods through a supply chain. Disruptions to this flow, such as the Bullwhip Effect (BWE), have become increasingly severe and dynamic, challenging current methods for counteracting these disruptions. This thesis develops a systems and control framework for designing SCM policies to meet this challenge.

The thesis makes use of economic-engineering modeling principles to model the dynamics of the supply chain and calculate the flow of goods. Specifically, the supply chain is considered to be analogous to an electrical circuit, with the flow of goods analogous to the current and price changes analogous to voltage drops. Based on these analogies, the thesis develops the building blocks required for modeling a supply chain, consisting of storage, production and external markets. The building blocks are used to construct a serial supply chain with multiple stages and products. The supply chain is analyzed in both the time and frequency domain, quantifying how disruptions influence the flow of goods.

To regulate the flow of goods through a supply chain, this thesis models the procurement, production and product pricing policies of SCM as individual PID controllers. The PID controllers are shown to regulate the flow of goods in a manner similar to how an actual manager would.

The effectiveness of the framework is demonstrated in a simulation study of the BWE in the supply chain of Valtris Specialty Chemicals (VSC). It is shown how tools in classical control theory, like Bode diagrams, are effective in the analysis of the dynamics and severity of the BWE in terms of the resonance frequency and the amplification, respectively. In addition, this thesis shows how the tuning of the PID controllers relates to specific adjustments in the policies of VSC managers.

Economic Engineering
supply chains
Supply Chain Management
systems and control
PID control
Bullwhip Effect

http://resolver.tudelft.nl/uuid:db2e51e0-5606-4629-af3e-83b1799292f4

Student theses

master thesis

© 2022 Roemer Dolman