System dynamics for supply chain risk management in hybrid MTS/MTO production scenarios with short shelf-life products

Abstract

This article introduces a Supply Chain Risk Management (SCMR) model aiming to develop a raw material sourcing methodology to define material flow management policies under hybrid Make to Order (MTO) and Make to Stock (MTS) scenarios, which consider the analysis of risks and operational costs of supplying products with short shelf life. This model identifies and measures risks according to inventory positioning criteria, using a System Dynamics (SD) model that varies demand and production levels in value-adjusted contexts. The model shows that a hybrid methodology decreases operating costs and improves the service level indicator. The main contribution of the proposed methodology is the assessment of different configurations to establish the inventory positioning point in particular conditions of the planning and logistics processes in a CS. The methodology was assessed in a Colombian company of food products with short-term shelf life.