A system dynamics model for the supply chain procurement transport problem: comparing spreadsheets, fuzzy programming and simulation approaches

Abstract

This article proposes a simulation approach based on system dynamics for operational procurement and transport planning in a two-level, multi-product and multi-period supply chain. This work uses the Vensim((R)) simulation tool to highlight the potential of system dynamics for supply chain simulation. A real continuous simulation application is presented in an automobile supply chain. The effectiveness of the proposed model is validated through the comparison of the results provided by spreadsheet-based simulation, fuzzy multi-objective programming and system dynamics-based simulation models. The fundamental point of this paper is that the simulation model is the most effective approach in quantifying the trade-off between number of truck shipments and average inventory level. In this case, the number of truck shipments is to be minimised, resulting in a higher inventory level. If the average inventory level were minimised, then there would be more truck shipments. Here, it is shown the benefit of this type of simulation model in reducing inventory by about 10%.