Information and Product Quality Dynamics in Tiered Supply Networks

Leif M. Johnson and Peter R. Wurman

Economic supply networks can be viewed as complex systems composed of multiple, independent, interacting agents. Agents (companies) form relationships with one another by trading goods for other goods, services, or money. This paper presents a model for supply networks composed of a fixed number of discrete tiers of companies. Each company has mutable parameters (product quality, information integrity, profit sharing) that determine specific aspects of the company’s behavior. After describing the model we apply it to investigate the global behavior of multi--tiered supply networks. In particular we are interested in how information integrity and product quality change under various circumstances, and how these parameters influence and are influenced by the global structure of a supply network. Preliminary experiments concentrated on finding parameter values that encouraged stability and found complex relationships among available revenue, profit sharing by individual companies, and initial wealth of new companies. Further investigations have revealed a few subtle trends, but they have emphasized the difficulty in finding more precise, yet globally applicable, data analysis techniques.

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