Summary: An Entropy-based Complexity Model for Assembly Supply Chains
and Its Relationship to Inventory Cost in the Presence of
1 General Motors Global Research & Development, Warren, MI
2 Kelley School of Business, Indiana University, Bloomington, IN
3 Department of Mechanical Engineering, University of Michigan, Ann Arbor, MI
We propose a complexity measure for assembly supply chains, based on the concept
of information entropy. This entropy-based complexity measure takes into account fac-
tors such as the supply chain configuration, the level of variety offered by each node
of the supply chain, and the demand ratios across all the variants offered by a node.
We then investigate the relationship between the entropy-based complexity and the
inventory cost of an assembly supply chain. More specifically, we study the degree of
consistency between the complexity and inventory cost criteria when evaluating assem-
bly supply chains with the same configuration but different levels of product variety.
We show that the entropy-based complexity and the inventory cost are equivalent under
certain conditions, in the sense that both of them rank a given set of supply chains in