Simulation of surge effect in supply chain for demand uncertainty at the end customer

Managing supply chains in today's competitive world is increasingly challenging. The greater uncertainty in the demand will affect the performance of the supply chain. In this paper surge effect in the supply chain is simulated for sudden rise and sudden fall of the demand. Monte Carlo simulation method and Excel software are used to simulate the surge effect in the supply chain for demand uncertainty. The demand is assumed a random variable with an approximate continuous normal distribution pattern. The sudden rise and sudden fall of the demand are taken to the standard deviation limits of the normal distribution. From the simulation results it is found that the quantity required at the stages through the supply chain from down stream to upstream is increased for the sudden rise of the demand of the end customers and decreased for the sudden fall of the demand of the end customers. And this effect at the supplier is more than the retailers. This is identified more significantly at the limit of the 3 std. In addition this for high policy decision and high sudden rise of the demand (ie.3std) the safety stock required at the suppliers is reached to more value than the actual mean value of the demand at the end customers.