Abstract for: The Dynamics of the Government Supply Process for High-Value Spare Parts
Supply chains providing high-value parts to the Government have been plagued by both shortages and excess inventory. In many of these supply chains, a computerized government process calculates recommended orders for both new and overhaul parts. A research effort was undertaken to understand the mathematics of this process and its impact on supply chain performance. A system dynamics model of the supply chain was developed that incorporates the equations of the requirements determination process. The model revealed that the process worked appropriately for constant demand and responded well to a ramp-up in demand. It was found, however, that in the face of varying demands substantial bullwhip was produced in the supply chain. Moreover, it was shown that the ordering process is extremely sensitive to common data errors such as the production lead-time and that production constraints, not included in the ordering algorithms, created deep and prolonged shortages. On going research is developing improvements to the formulation of the ordering process and developing supply chain strategies for the next five years under differing demand scenarios.