The effect of supply network configuration on occurring chaotic behavior in the retailer’s inventory

Today’s market place is increasingly dynamic and volatile. In this area supply network issues recently have attracted a lot of attention from industrial practitioners and academics worldwide. Chaos theory is the study of complex, nonlinear, dynamic systems. For chaotic systems, a tiny change in conditions may result in an enormous change in system output, whereas substantial changes in conditions may be absorbed without significant effect to the system’s output. In this paper, the researchers have investigated the effect of supply network design on the chaotic behavior of supply network from retailer’s inventory point of view. The multi-level supply network is characterized by extension of the widely known beer distribution model. System dynamic approach is implemented to study the supply network behavior. Furthermore, we use Lyapunov exponents to quantify the system chaos. Simulation outputs and its analysis indicate that the number of distributors and wholesalers have a significantly effect on making the system behavior chaotic.