ABM Example 3

Multi-Tier Supply Chain

Raw materials → components → assembly → retail. Disruption at one node propagates upstream and downstream through inventory dynamics.

SUPPLY CHAIN LAYERS Raw Materials stock: 1000 lead_time: 2 price: $10/unit Components stock: 300 conv_rate: 0.4 price: $30/unit Assembly stock: 150 demand: 100/step price: $80/unit Retail stock: 0 (SHOCK) lost_demand: 50% price: $120/unit supply supply supply order order order DISRUPTION SEQUENCE t=0: Retail loses 50% of stock (external shock) t=1–2: Assembly demand exceeds supply Assembly reduces prices 5% to attract orders Increases orders to Components (bullwhip) t=3–4: Components backlog builds Raw materials delivery delayed by lead_time t=5+: Cascade amplification Raw materials price rises → components cost up → assembly margin falls Retail demand never recovers → permanent excess capacity upstream BULLWHIP EFFECT Order variance amplifies as you move upstream. A 50% retail shock → 75% assembly orders → 100%+ component orders.

MECHANISM

Bullwhip Effect

Small demand change at retail propagates upstream with amplification. Each tier orders more than it needs to buffer against lead time.

FEEDBACK

Inventory Management

Nodes hold safety stock based on expected demand. When demand drops, stock builds → overcapacity → price cuts to unload.

AGENTS

Tier Types

  • RawMaterial — supply-constrained, exogenous delivery
  • ComponentMaker — conversion-limited, inventory-driven orders
  • Assembler — demand-constrained, responsive to backlog
  • Retailer — exogenous demand + disruption shocks

OBSERVABLES

Key Metrics

  • stock_levels per tier
  • order_variance ratio (upstream / downstream)
  • price_volatility per tier
  • recovery_time (steps to steady state)