Bottom-Up Vs. Top-Down Approaches to Supply Chain Modeling

Abstract

This paper reports on applications of optimization modeling systems to integrated supply chain management. Such systems assist managers in coordinating functional activities across the company's supply chain and in coordinating inter- temporal decisions across operational, tactical and strategic planning horizons. The paper begins with a discussion of the differences between Transactional IT, which is concerned with acquiring, processing and communicating raw data about the company's past and current supply chain operations, and Analytical IT, which is concerned with evaluating decisions over short, medium and long term futures. The paper then examines a Supply Chain Modeling System Hierarchy composed of six optimization modeling systems, which are analytical, that are tightly linked to four information systems, which are transactional. An important component of these optimization modeling systems are supply chain decision databases that are different than, but derived from, transactional databases. Principles for creating and exploiting these decision databases are presented. *