Supply Chain management by H-infinity control

Abstract— In this paper, a control technique is proposed for the management of a supply chain (SC) model linearized about nominal operating conditions. The performance considered is a weighted norm comprising the inventory and the orders placed by each site, hence controlling the bullwhip effect together with local management costs. It is shown how the optimization of local costs at each site is related to the performance of the whole chain and a decentralized control methodology is proposed based on this relation. Note to Practitioners—This paper exploits a approach to control the operation of a SC. This control methodology minimizes the worst case effects of the external demand fluctuations on the performance of the system. The minimization over the worst case may deteriorate the average performance of the SC. For this reason, if it is known, e.g., from past data, that the demand fluctuations have major frequency components on a given frequency band interval, the strategy can be applied with a filtering procedure improving also the average performance in terms of inventory behavior, while assuring no bullwhip at all frequencies. An open loop implementation of such a policy could be exploited if the SC delays are not constant.