Supply-chain modelling and control under proportional inventory- replenishment policies

C. I. Papanagnou, G. D. Halikias

Research output: Contribution to journalArticlepeer-review


A novel state-space model of a multi-node supply chain is presented, controlled via local proportional inventory-replenishment policies. The model is driven by a stochastic sequence representing customer demand. The model is analysed under stationarity conditions and a simple recursive scheme is developed for updating its covariance matrix. This allows us to characterise the 'bullwhip effect' (demand amplification) in the chain and to solve an optimisation problem for a three-node model involving the minimisation of inventory subject to a probabilistic constraint on downstream demand. Finally, issues related to estimation schemes based on local historical data are briefly discussed.

Original languageEnglish
Pages (from-to)699-711
Number of pages13
JournalInternational Journal of Systems Science
Issue number7
Early online date19 May 2008
Publication statusPublished - Jul 2008


  • Bullwhip effect
  • Covariance matrix estimation
  • Information-sharing
  • State-space model
  • Supply chain


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