An entropy-based approach for measuring complexity in supply chains

摘要

Today's supply chains are more complex than ever due to globalisation and its effects, especially on logistics activities. Therefore, understanding and managing complexity in supply chains are very popular topics nowadays. Measures for complexity in supply chains contribute to their manageability and controllability. This paper describes an approach to the measurement of complexity in supply chains based on Shannon's information entropy. The new proposed approach gives a formal approach that is able to measure and analyse the supply chain complexity. The main contribution of this study is to extend two formulas (structural and operational complexity) building on Shannon's entropy measure to evaluate the complexity of a supply chain. The aim is to measure complexity associated with information and material flows in the chain. A numerical example is presented to demonstrate the approach.