Abstract
Integration has formed the core of logistics and supply chain literature since the 1980s, but empirical research indicates that it does not always lead to better performance. This research effort endeavors to apply information theory to begin to assess the cost of complexity in supply chains. Extant research into supply chain complexity remains in the formative stages, so the purpose of this research is to explore the utility of entropy as a means of comparing alternative supply chain strategies and structures. Simulation experiments revealed that when compared to the bullwhip effect index, an index based upon weighted entropy offered superior assessments of supply chain performance when comparing the effects of safety stock and information sharing, but exhibited performance equally poor to the bullwhip effect index’s for predicting the effect of changing the number of echelons in a supply chain. This research lays the foundation for future research that will expand the weighted entropy formulation to account for differences in the number of supply chain players as well as the effect of different demand scenarios.
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Gravier, M.J., Kelly, B.P. (2012). Measuring the Cost of Complexity in Supply Chains: Comparison of Weighted Entropy and the Bullwhip Effect Index. In: Jodlbauer, H., Olhager, J., Schonberger, R. (eds) Modelling Value. Contributions to Management Science. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2747-7_13
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DOI: https://doi.org/10.1007/978-3-7908-2747-7_13
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