Inventory Model

This sample model demonstrates an Inventory Pull and Manufacturing system. The process is characterized by the Reorder Points and Reorder Quantities defined for each resource in the supply chain. There are four steps in the supply chain: Warehouse, Assembly, Component1 Vendor and Component2 Vendor, and the Raw Material Vendor. Inventory is pulled only when it is needed (there is insufficient stock to fill the order or the Reorder Point has been reached).

The process begins with a customer order of random size. The Warehouse first attempts to fill the order from its inventory. If the customer order can’t be filled, more Finished product is pulled from Assembly (based on the Reorder Quantity), and the customer order is placed on backorder. If the customer order can be filled from Warehouse inventory, the model will fill the order and check to see if the Reorder Point has been reached as a result of that order. If the Reorder Point has been reached, more inventory will be pulled from Assembly.

The Assembly and Component Vendor steps work in a similar fashion. After each order is received the model checks to see if any Reorder Points have been reached and pulls more inventory if necessary. In the manufacturing sub-processes each item in the customer order is manufactured one at a time. The Raw Material Vendor is not being modeled in detail, because it is not a focus of this study. A Delay is simply used to model the effect on the Component Vendors.

Using the model parameters dialog that appears when you run the model, you can experiment with different Reorder Points and Quantities to evaluate their effect on the system (inventory levels, and the delay to the customer). The goal is to minimize the amount of Inventory held without impacting the customer negatively (increase order cycle time). Finding the optimal Reorder Point and Quantities for each node in the supply chain is the goal. Real time plots can be used to view inventory levels and the effect of a change in a Reorder point or quantity.

The model also has an optimization defined so OptQuest® can be used to find optimal quantities.

Demonstration Model

In order to view the demonstration model you must have SIMPROCESS installed on your computer and you must have a license. If you don’t have SIMPROCESS you may download a trial version.

You must save the demo model file by RIGHT CLICKING on the file below and select “Save Target As”. Save the file to your computer. After you launch SIMPROCESS select File and Open. Then navigate to where you saved the demo file and select to open it.

Additional demonstration models are in the models/Demos directory which is located in the SIMPROCESS working directory.