According to the typical classification, there are three types of simulation:
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discrete process simulation, the most commonly used, with the best-described methodology and significant support from IT tools offered on the market
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continuous process simulation – also with a well-developed methodology, but used less frequently in practice; the number of applications supporting continuous process simulation offered on the market is smaller than in the case of discrete processes
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MRP simulation, also known as “what-if” simulation – can be implemented in virtually any ERP system; the idea of this simulation is to analyze many variants of possible scenarios using procedures implemented in the system and using data entered into the system.
The characteristics of all types of simulation are contained in a work by Ricky G. Ingalls. The development of information technology and simulation methodology currently enables the implementation of the “what-if” type outside of ERP system environments. The ability to build multiple simulation scenarios and their automatic execution is becoming a feature of many simulation programs available on the market. This creates the basis for seeking optimal solutions. The presented work discusses the possibility of using a simulation-optimization experiment to build a material supply strategy in a manufacturing enterprise. The article is organized as follows: in section 2, the problem is formulated; the construction of the material and capital flow model is presented in section 3. Section 4 contains a description of the simulation-optimization experiment and its results, and final conclusions and plans for further work are placed in section 5.
Problem formulation
The task of the project team was to improve the process of supplying metallurgical products for production in a large railway industry enterprise. The specificity of this market implies exclusively make-to-order production. Until now, the procurement process was carried out in a very simple way. Immediately after signing a contract with a client, one order was placed for the materials needed to complete the entire contract. In this specific case, the contract covered 17 products, for which a total of 238 tons of sheet metal were needed. The contract execution time was set at approximately 2 years. Such a solution generates huge storage costs and, additionally, causes a large amount of capital to be frozen for a significant period. The goal of the analysis was as follows – to define a supply strategy so as to achieve a reduction in storage costs and not lead to capital being frozen.
The analyzed process consists of two main flows – the flow of material and capital. Material flows from the supplier, through the warehouse and the production department, to the finished goods warehouse. The direction of capital flow is the opposite. At the moment the sheet metal arrives at the warehouse, an invoice is generated, which is settled after a time equal to the payment term, and the money is transferred to the supplier’s account. Such a model architecture allows for a clear illustration of the dependencies between the mentioned flows. It was also necessary to take into account the goals that the manufacturing enterprise strives for; the first is that the raw material is always available at the beginning of the production process, the second is the reduction of committed financial resources. It was also assumed that the subject of the research would be only one type of material. This allowed for the simplification of the model, but on the other hand, it ensured the full implementation of the project, which was important due to time constraints. It was assumed that the developed solution could be extended to other types of materials.
The article comes from the journal “Logistyka” 3/2010.