Abstract

Abstract for: Analysis of Supply Chain Inventory Management Under Cash Flows Feedback

Introduction Supply chain models mostly treat inventory and cash flows independently. However, these flows are interdependent in nature and may affect supply chain performance. This study uses a system dynamics approach to analyse how liquidity constraints of supply chain players affect inventory ordering decisions and later affect the supply chain when the demand pattern varies.
Approach System Dynamics Modelling - both qualitative (CLD) and quantitative (SFD) has been incorporated for different scenario analysis. First, the causal loop analysis helped identify feedback loops. Then, the stocks-and-flows method is utilised for quantitative modeling of the variables. Later, scenario analysis helped understand the entire supply chain.
Results Results reveal that supply chain performance is heavily affected when stakeholders ignore cash flow feedback. There is a limit to improving supply chain performance, even if stakeholders are willing to put more liquidity at stake.
Discussion The work opens directions to explore the cash flow feedback-informed decision-making for inventory management under various levels of market demand growth. It is also possible to analyse the variability of both inventory and cash flows under cash flow feedback.

Introduction	Supply chain models mostly treat inventory and cash flows independently. However, these flows are interdependent in nature and may affect supply chain performance. This study uses a system dynamics approach to analyse how liquidity constraints of supply chain players affect inventory ordering decisions and later affect the supply chain when the demand pattern varies.
Approach	System Dynamics Modelling - both qualitative (CLD) and quantitative (SFD) has been incorporated for different scenario analysis. First, the causal loop analysis helped identify feedback loops. Then, the stocks-and-flows method is utilised for quantitative modeling of the variables. Later, scenario analysis helped understand the entire supply chain.
Results	Results reveal that supply chain performance is heavily affected when stakeholders ignore cash flow feedback. There is a limit to improving supply chain performance, even if stakeholders are willing to put more liquidity at stake.
Discussion	The work opens directions to explore the cash flow feedback-informed decision-making for inventory management under various levels of market demand growth. It is also possible to analyse the variability of both inventory and cash flows under cash flow feedback.