The impact of stock-dependent demand on supply chain dynamics

This paper presents an investigation on the dynamics of a supply chain system under stock-dependent demand. Considering the feature of piecewise linearity, a switched linear model composed of three subsystems is developed. Based on the switched model, some analytical stability results are derived. Simulation experiments are designed to verify the stability results and observe nonlinear dynamics. We show that stock-dependent demand not only leads to different stability results but also makes nonlinear dynamics more complicated. We also reveal that the nonlinear dynamics of the switched model, such as chaotic and periodic fluctuations of inventory and order, are essentially caused by switching frequently among subsystems due to uncertainties of inventory status. The results obtained in this paper help us understand the dynamic complexities of supply chain system and provide guidelines for selecting decision parameters to improve overall performance.