Simulation-based Ripple Effect Modelling in the Supply Chain

In light of low-frequency/high-impact disruptions, the ripple effect has recently been intro-duced into academic literature on supply chain management. The ripple effect in the supply chain results from disruption propagation from the initial disruption point to the supply, pro-duction and distribution networks. While optimization modelling dominates this research field, the potential of simulation modelling still remains under-explored. The objective of this study is to reveal research gaps that can be closed with the help of simulation modelling. First, recent literature on both optimization and simulation modelling is analysed. Second, a simula-tion model for multi-stage supply chain design with consideration of capacity disruptions and experimental results are presented in order to depict major areas of simulation application to the ripple effect modelling. Based on both literature analysis and the modelling example, managerial insights and future research areas are identified in regard to simulation modelling application to the ripple effect analysis in the supply chain. The paper concludes by summa-rizing the most important insights and outlining a future research agenda.

Supply chain design structure