Simulation-Based Decision Analysis of Demand Sharing and Inventory Control in Multi-Tier Manufacturing Supply Chains

Authors

  • Siraj Zahran Department of Industrial Engineering, University of Business and Technology, Jeddah 23847, Saudi Arabia
  • Salem Aljazzar Department of Industrial Engineering, University of Business and Technology, Jeddah 23847, Saudi Arabia
  • Zaher Abusaq Department of Industrial Engineering, University of Business and Technology, Jeddah 23847, Saudi Arabia
  • Mohammad Kanan Department of Industrial Engineering, University of Business and Technology, Jeddah 23847, Saudi Arabia
  • Ramiz Assaf Industrial and Mechanical Engineering Department, College of Engineering, An-Najah National University, Nablus, Palestine
  • Abdalmuttaleb Al-Sartawi Accounting Finance & Banking Department, College of Business & Finance, Ahlia University, Manama, Bahrain

DOI:

https://doi.org/10.5281/zenodo.22976011

Keywords:

Demand Visibility, Inventory Control, Manufacturing Supply Chains, Bullwhip Effect; Simulation-Based Decision Analysis, Multi-Tier Supply Chains

Abstract

Upstream replenishment orders can fluctuate more than customer demand when each supply-chain tier forecasts from the orders it receives. This study uses a periodic-review simulation to compare retailer-managed inventory, in which each tier forecasts from downstream orders, with a shared-demand scenario in which the distributor and manufacturer observe point-of-sale demand. Demand generation, forecasting rules, lead times, and replenishment policies match across scenarios. The analysis includes a three-tier manufacturing supply chain and a multiple-retailer extension that varies network size and cross-retailer demand correlation. Thirty paired replications are run for each setting. In the base-model grid, the simulated reduction in the manufacturer-tier bullwhip ratio ranges from 89.7% to 97.2%. At a demand autocorrelation of 0.6, the reduction in the total safety-stock holding proxy ranges from 47.6% to 62.4% across the displayed lead times. In the low-correlation network scenario, the distributor-tier bullwhip reduction falls from 63.8% to 34.8%, and the total safety-stock proxy reduction falls from 23.8% to 10.9% as the number of retailers increases from one to 40. These results show that the measured advantage of shared demand visibility depends on the demand structure and inventory accounting boundary. The simulation does not establish realized inventory savings or service performance in a factory.

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Published

2026-09-26

Issue

Vol. 7 No. 2 (2026): Reports in Mechanical Engineering

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Articles

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How to Cite

Simulation-Based Decision Analysis of Demand Sharing and Inventory Control in Multi-Tier Manufacturing Supply Chains. (2026). Reports in Mechanical Engineering, 7(2), 211-226. https://doi.org/10.5281/zenodo.22976011