Evaluating PID control for supply chain management: A freshman design project

Supply chain management is concerned with the efficient movement of goods through a network of suppliers and retailers. As delayed dynamical systems, supply chains represent an excellent opportunity for illustrating the benefits of engineering control principles to what may normally be perceived as a "business" process. This paper describes an Excel modeling project developed by the authors for a first-year engineering course at Arizona State University that 1) introduces students to a meaningful application of control engineering principles, and 2) enables them to develop their computer-based problem-solving skills. The project contrasts standard inventory management policies based on traditional Economic Order Quantity (EOQ) approaches with a judiciously-designed Proportional-Integral-Derivative (PID) controller in the case of a single inventory in a supply chain. A well-tuned PID-based policy is able to generate effective decisions on orders that ultimately reduce the need for safety stock, eliminate backorders, and mitigate the "bullwhip effect"; such behavior in an actively managed supply chain represents desirable outcomes for the enterprise.