A simulation based decision support system for supply chain management

Abstract

This study focuses on the improvement of supply chain performance in one of the biggest commodity product manufacturers in Turkey. The aim is to generate a tool that runs as a Decision Support System (DSS) and procides an easy to use simulation environment for supply chain managers in decision-making. In the current supply chain system there is no demand information flow upwards in the chain and the manufacturer determines its manufacturing rate according to the orders faced in the last thirty days. On the other hand, the manufacturer offers a volume discount option if the orders placed by a distributor exceed a certain quota. In the "Monthly Quota" system, the distributors gain d discount for their unit-purchasing price, if they reach their quota at the end of the evaluation period. As an improvement of the current supply chain system, an information system is proposed to share the Point of Sale data among the members of the supply chain. Another improvement strategy may be applying the "Rolling Horizon" instead of "Monthly Quota" method where the quotas are checked every time a distributor places an order. Three simulation models are developed by using the software ARENA, a graphical user interface that uses MS-Excel as a database is generated and integrated into a DSS for the supply chain managers. The DSS environment is used to compare all three models with different performance measures.