Operational Complexity of Supplier-Customer Systems Measured by Entropy—Case Studies

Abstract

This paper discusses a unified entropy-based approach for the quantitative measurement of operational complexity of company supplier-customer relations. Classical Shannon entropy is utilized. Beside this quantification tool, we also explore the relations between Shannon entropy and (c,d)-entropy in more details. An analytic description of so called iso-quant curves is given, too. We present five case studies, albeit in an anonymous setting, describing various details of general procedures for measuring the operational complexity of supplier-customer systems. In general, we assume a problem-oriented database exists, which contains detailed records of all product forecasts, orders and deliveries both in quantity and time, scheduled and realized, too. Data processing detects important flow variations both in volumes and times, e.g., order-forecast, delivery-order, and actual production-scheduled one. The unifying quantity used for entropy computation is the time gap between actual delivery time and order issue time, which is nothing else but a lead time in inventory control models. After data consistency checks, histograms and empirical distribution functions are constructed. Finally, the entropy, information-theoretic measure of supplier-customer operational complexity, is calculated. Basic steps of the algorithm are mentioned briefly, too. Results of supplier-customer system analysis from selected Czech small and medium-sized enterprises (SMEs) are presented in various computational and managerial decision making details. An enterprise is ranked as SME one, if it has at most 250 employees and its turnover does not exceed 50 million USD per year, or its balance sheet total does not exceed 43 million USD per year, alternatively.

The Entropy Complexity of an Asymmetric Dual-Channel Supply Chain with Probabilistic Selling

“…Lou et al [30] analyzed the entropy complexity of a dual-channel supply chain which consisted of one manufacturer and two retailers; the manufacturer took sales as a decision-making variable in order to gain a larger market share in the competition game. Lukáš and Hofman [31] used the classical Shannon entropy approach to discuss the operational complexity of company supplier-customer relations. Zhou et al [32] investigated the properties of six kinds of entropy based on risk measures and discovered that none of the risk measures satisfied the system's properties.…”

Computational Complexity

“…Case Studies", by Ladislav Lukáš and Jiří Hofman, addresses a unified entropy-based approach for the quantitative measurement of operational complexity of company supplier-customer relations. Results of supplier-customer system analysis from selected Czech small and medium-sized enterprises are presented in various computational and managerial decision making details [10].…”