Simulation of retail supply chain behaviour and financial impact in an uncertain environment

Traditionally, attention has been focused on uncertainty in customer demand. However, uncertainty is also inherent in the market on the supply side, because the quantity and quality of raw materials delivered from external suppliers may differ from those requested. This paper quantifies the financial impact of having uncertainty in a retail supply chain. Having unstable inventory records leads to profit losses in a supply chain. These inventory records may not be correct due to various causes such as transaction errors, misplacement, etc. These inaccuracies are caused by uncertainties in customer demand, parts supply and variations in the process itself. The aim of this paper is to examine the relationship between inventory inaccuracy and financial performance. The results indicate that each type of uncertainty can have different impacts on the chain and the elimination of uncertainty can more or less reduce supply chain costs and hence, increase profit.