Modeling the dynamics of a two-stage supply chain: a switch system theory approach

The dynamic characteristics of a two-stage supply chain system, consisting of one retailer and one distributor were analyzed. When the inventory of the distributor was restricted, the supply chain system would be changed into a linear switched system. The switch was controlled by the system's status and the outside decision. After the establishment of the model for switched system, the model state of the system and its stability, and the dynamic characteristcs of the whole supply chain system were analyzed. The analysis indicated that the setting of desired inventory level of the distributor has great influence on the dynamics of the system, and there are interactions between the supply chain members, especially the lack of the supplier's inventory.