Modelling Dynamics of a Supply Chain under Uncertainty: A Case from the Automotive Industry

The authors investigate a three-stage supply chain of a multinational firm in the automotive components industry. Factories, located in Italy, carryout the manufacturing process of components for braking equipment. The first two manufacturing sites provide the final assembly site with components for original equipment (OEC); they also produce components for the aftermarket (AMCs). The demand for OECs is dynamic and is deterministically known on a one-year horizon. On the other hand, the demand for AMCs is uncertain and is distributed according to probability density functions. To face such complexity in evaluating the supply chain performance, a dynamic and stochastic simulation model is proposed. Two different scenarios are investigated according to whether the manufacturing sites are onsidered as independent business units or as units that obey strict production requirements of the supply chain. The results obtained confirm the effectiveness of the model, which reveals a suitable tool for tactical/strategic decision making.