An Agent-based Modeling Approach to Agile Supply Network
The Dongdaemun fashion apparel market in Seoul has formed
a unique supply network through evolutionary process. The market constituencies
include thousands of retailers and wholesalers, intermediaries and raw materials
suppliers, and manufacturers. Without any central control, the market has
managed to become one of the most efficient and flexible suppliers of apparels
in the world. The latest fashion trends from Paris, New York, and Tokyo are
reflected in the display shelves within days. Replenishment lead time of
hot-selling items is only one or two days. Average product life cycle of
an item is two weeks from design to salvaging. In addition to this lightening
speed, the quality of products is good and prices are relatively cheap. Looking
inside the market, we found that the roles and behaviors of the players have
changed continuously like any other complex adaptive systems.
In this talk, we focus on the two important dynamics of
the market. One is how the market adapts to the changing fashion trends by
imitation, learning, and innovation. The other is how the risk sharing (via
return policy) is determined between wholesalers and retailers when facing
the demand uncertainty. We report the early results from simple agent-based
simulation models. Initial insights from the experiments and future modeling
directions will be discussed.
Seung-Kyu Rhee
KAIST Graduate School of Management
http://kgsmweb.kaist.ac.kr
skrhee@kgsm.kaist.ac.kr