A production‐inventory system based on a model proposed by Axsäter is examined with the purpose of understanding the dynamic properties of the model.
The information flow concept is discussed and a dynamic analysis using a system simplification approach is carried out to achieve an understanding of the dynamic behaviour of the system. Finally, the information flow is examined and analysed from a hierarchical perspective.
The model is extended to include an order decision rule and a production unit and it is shown that the extended model has the capability to represent the dynamics of a number of different system management principles. The three different model instances of base stock, kanban and material requirements planning character are analysed.
Dynamic modelling of production‐inventory and supply chain models are usually analysed at an aggregate level not involving any complex relations of materials or capacities. In this paper, this line of research is merged with an approach based on multiple information channels using matrix representation and it is shown how a system simplification approach can be used for this purpose.
