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Network Simulation Method for the evaluation of perturbed supply chains on a finite horizon

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Abstract

Due to lead times and other delays in a chain, the Net Present Value (NPV) can be easily estimated if Laplace transforms in MRP models are employed. This leads to the estimation of NPV on an infinite horizon. However, for the simultaneous perturbations of several parameters in a supply chain and activities running on the finite horizon, NPV could be overestimated. Therefore, we suggest the parallel use of the Network Simulation Method (NSM) with the MRP theory to reduce these overestimations. This paper aims to present the NSM to evaluate supply chains on a finite horizon when stochastic behaviour of time delays and other perturbations of parameters are also essential, which is typical for food and drug supply chains. The circuit simulator NGSPICE, which was previously used by certain authors in thermodynamics, also evaluates the financial consequences of simultaneous perturbations in a finite chain. This approach holds better for the stochastic processes of simultaneous perturbations, compared to our results achieved using MRP theory without these corrections. As presented in the numerical example, the shorter the horizon and lower the interest rate, the more important it is to use the correction factors obtained from the NGSPICE simulator.

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Source: Author’s illustration using NGSPICE

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Acknowledgement

This work was partly supported by the Spanish Ministry of Science, Innovation and Universities project entitled ‘Optimisation of zero-defects production technologies enabling supply chains 4.0 (CADS4.0) (RTI2018-101344-B-I00)’ and partly by the Slovenian Research Agency (ARRS) under the contract J6—939.

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Authors and Affiliations

  1. Universidad Politécnica de Cartagena, Campus Muralla del Mar, 30202, Cartagena, España

    Francisco Campuzano-Bolarín, Fulgencio Marín-García & José Andrés Moreno-Nicolás

  2. Institute INRISK & SEB, University of Ljubljana, Ljubljana, Slovenia

    Marija Bogataj & David Bogataj

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  1. Francisco Campuzano-Bolarín
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  2. Fulgencio Marín-García
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Correspondence to Marija Bogataj.

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Campuzano-Bolarín, F., Marín-García, F., Moreno-Nicolás, J.A. et al. Network Simulation Method for the evaluation of perturbed supply chains on a finite horizon. Cent Eur J Oper Res 29, 823–839 (2021). https://doi.org/10.1007/s10100-021-00748-3

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