In a stochastic supply network model, buffer stocks make the critical demand rate topology-dependent, and broad, short chains outperform long, narrow ones.
Critical demand in a stochastic model of flows in supply networks
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abstract
Supply networks are essential for modern production, yet their critical properties remain understudied. We present a stochastic model with random production capacities to analyze material flow to a root node, focusing on topology and buffer stocks. The critical demand, where unsatisfied demand diverges, is examined mostly through numerical simulations. Without stocks, minimal production dictates behavior, making topology irrelevant. With stocks, memory effects arise, making topology crucial. Increased local connectivity is beneficial: firms should favor broad, short supply chains over long, narrow ones.
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Critical demand in a stochastic model of flows in supply networks
In a stochastic supply network model, buffer stocks make the critical demand rate topology-dependent, and broad, short chains outperform long, narrow ones.