SPC-based Inventory Control Policy to Im-prove Supply Chain Dynamics

Inventory control policies have been recognized as a contributory factor to the bullwhip effect and inventory instability. Previous studies have indicated that there is a trade-off between bullwhip effect and inventory performance where the bullwhip effect reduction might increase inventory instability. Therefore, there is a need for inventory control policies that can cope with supply chain dynamics. This paper proposes an inventory control policy based on a statistical process control approach (SPC) to handle supply chain dynamics. The policy relies on applying individual control charts to control both the inventory position and the placed orders adequately. A simulation study has been conducted to evaluate and compare the proposed SPC policy with a traditional order-up-to in a multi-echelon supply chain. The comparison showed that the SPC policy outperforms the order-up-to in terms of bullwhip effect and inventory performances. The SPC succeeded to eliminate the bullwhip effect whilst keeping a competitive inventory performance. massimo.tronci @uniroma1.it Keyword—Supply Chain, Inventory Control, SPC, Control Chart, Bullwhip Effect, Inventory Variance, Simulation