Pulling the distribution in supply chains: simulation and analysis of Dynamic Buffer Management approach

Abstract

Inventory management in supply chains faces several typical problems, such as low turnover, high inventory investments, lost sales due to a stockout of certain items and surpluses of these same items in other locations. In this context, this research aims to evaluate the effectiveness of the Dynamic Buffer Management (DBM) method to protect the availability of products for immediate fulfilment in an environment that adopts the Theory of Constraints (TOC) pull distribution and replenishment solution. DBM algorithms and parameters were modelled and simulated in ProModel software in scenarios whose demand behaviour–here represented by a retail link – has two levels of coefficient of variation. Service level, inventory in the system, and inventory turnover are used as performance measures. The results indicate that disabling DBM and maintaining a reasonable target level in the system inhibit undue adjustments and ensure the best performance in scenarios with demand without trends. However, given the uncertainties about real demand behaviour, the activation of DBM for some treatments allows good results and may help managers to identify changes in the demand pattern.