A System Dynamics Model and Interface for the Simulation and Analysis of Milk Supply Chains

Abstract

The objective of this chapter is the development of a System Dynamics model for the study of the milk supply chain and how an extreme event can affect its behavior. A simple interface is developed that can be used to increase the ease of communication and provide an interactive approach to the decision-making process. The model contains three echelons: farmers, processors and retailers. The main results show that under normal circumstances, the behavior of the system reaches equilibrium after a few oscillations. However, these oscillations can be smoothed out if the adjustment time of the order placement is increased. Under an extreme event that reduces the demand for milk, behavior changes and the system remains in dis-equilibrium for the entire simulation. Once again, adjustment times remain the leverages that can influence and mitigate those negative effects. Finally, a more robust and collaborative decision-making process among the actors of the chain could be beneficial for all not only under normal circumstances, but also in the presence of extreme uncertainty.