Supply Chain Management without Forecasting

Supply Chain Management without Forecasting
Author: Systems Innovation Practice

Accurate demand forecasting is an essential part of most supply chain management algorithms.  Yet, supply even in the most diligently managed chains can deviate widely from demand. Additionally, any disturbance in demand will often be amplified in a supply chain creating what is known as bullwhip effect. This simulation uses three parsimonious models to demonstrate that supply can be regulated reliably without forecasting demand. The inspiration for these models comes from PID (Proportional, Integral, Derivative) control in engineering controllers that utilize multiple functions of error (discrepancy between goal and actual condition) to regulate a quantity.

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