Simulations show the best way to support a continuous flow of merchandise on the ancient Silk Road was to have large stocks of inventory at key locations. They would act as buffers to absorb the fluctuations in product supply inevitably created by the bullwhip effect. Two such locations are shown in the screenshot below. [This article picks up where the second article “Taming the Bullwhip on the Silk Road” left off]
And this observation raises a big question: Who would have owned and operated the facilities where these huge inventory buffers were located? It required someone with a lot of money to store and protect the inventory, and It required someone who looked to the long term to make money, not just from one year to the next. Let’s see what emerges.
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How was it possible in the year 210 A.D. to maintain a continuous flow of merchandise on the Silk Road and to match supply with demand as conditions changed from one year to the next? How could people without telephones or any form of communication faster than the pace of a camel caravan figure out how to operate this vast supply chain without continuously running out of products in one city and building up too much somewhere else? [This article picks up where the first article “Ancient Silk Road – First Global Supply Chain” left off]
Based on simulations of Silk Road operations, and a bit of historical research, an interesting answer emerges. This answer cannot be absolutely verified, yet it fits the available facts and provides a simple and coherent explanation. Let’s start with the simulation results. In the initial simulation the supply chain runs for eight weeks and then silk inventory runs out in Palmyra (4), as shown in the screenshot below.
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