Dresden 2003 – scientific programme

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AKSOE: Physik sozio-ökonomischer Systeme

AKSOE 4: Mikro-ökonomische Modelle und Multi-Agenten-Systeme

AKSOE 4.5: Talk

Tuesday, March 25, 2003, 11:30–12:00, BAR/205

Supply chains and business cycles as unstable transport phenomena — •Dirk Helbing — Institute for Economics and Traffic, TU Dresden, Andreas-Schubert-Str. 23, 01062 Dresden

Concepts developed to describe instabilities in traffic flows can be generalized in a way that allows to understand the well-known instability of supply chains (the so-called “bull-whip effect”). That is, small variations in the consumption rate can cause large variations in the production rate of companies generating the requested product. Interestingly, the resulting oscillations have characteristic oscillations frequencies which are considerably lower than the oscillations in the assumed consumption rate. This suggests that instabilities of supply chains may be the reason for the existence of business cycles. The preconditions for these cycles are investigated in more detail.

[1] D. Helbing, Traffic and related self-driven many-particle systems, Reviews of Modern Physics 73, 1067 (2001).

[2] D. Helbing, Supply chains and business cycles as unstable transport phenomena, preprint (2002).