Using Discrete-Event-Simulation for Improving Opera-

tional Efficiency in Laboratories: A Case Study in Phar-

maceutical Industry

Alexander Troncoso-Palacio1, Dionicio Neira-Rodado1, Miguel Ortíz-Barrios1,

Gennet Jiménez-Delgado2, Luis Ramírez-Polo3
1Department of Industrial Management, Agroindustry and Operations, Universidad de la Costa
CUC, Barranquilla, Colombia
{atroncos1, dneira1, mortiz1}@cuc.edu.co

2Department of Industrial Processes Engineering, Corporación Universitaria Reformada CUR,

Barranquilla, Colombia
gejimenez@unireformada.edu.co

3Department of Industrial Processes Engineering, Universidad Autónoma del Caribe,

Barranquilla, Colombia
Luis.ramirez@uac.edu.co

Abstract. Just-in-time delivery has become a key aspect of pharmaceutical industry

when loyalizing customers and competing internationally. Additionally, prolonged lead
times may lead to increased work-in-process inventory, penalties for non-compliance and
cost overrun. The problem is more complex upon considering a wide variety of products
as often noted in pharmaceutical companies. It is then relevant to design strategies
focusing on improving the delivery performance. Therefore, this paper proposes the use
of Discrete-event simulation (DES) to identify inefficiencies and define solutions for the
delivery problem. First, input data were gathered and analyzed. Then, a DES model was
developed and validated. Finally, potential improvement scenarios were simulated and
analyzed regarding productivity rate and proportion of tardy jobs. A case study in a phar-
maceutical laboratory is presented to validate the proposed methodology. The results ev-
idenced that, by implementing the best scenario, the productivity may be augmented by
44.83% which would generate zero tardy jobs.

Keywords: Discrete-event simulation (DES), Pharmaceutical Industry, Productivity rate,

Proportion of tardy jobs

1 Introduction

Economy globalization has been positive for final users since they have access to more
customized and cheaper products. Nevertheless, this implies a great effort to companies
when competing internationally. In this regard, companies will have to search for new
ways to continuously improve their processes and value chain. This is particularly true
in pharmaceutical companies where it is necessary to tackle the insufficient drug supply

adfa, p. 1, 2011.
© Springer-Verlag Berlin Heidelberg 2011
problem. Additionally, in Colombia, the expected sales increment is 7% [1] which de-
mands a better productivity rate from this industry. On the other hand, it is also im-
portant to take into account the complexity of the pharmaceutical market and the intro-
duction of new international competitors which end up with affecting the internal pro-
duction and raising the stringency levels in terms of quality and on-time delivery. In
this respect, a Computers & Chemical Engineering paper [2] conducted a study on the
challenges and opportunities in the pharmaceutical industry where it was established
that further research is needed on capacity planning, modeling of decision alternatives
and identification of critical parameters limiting system performance.
Much coordination is needed between system resources to ensure that a continuous
flow of products can be effectively achieved. This requires complex operational and
tactical strategies that should be supported by decision support tools in order to both
tackle operational inefficiencies and provide real-time solutions. Moreover, it is neces-
sary to incorporate the uncertainties of the system, e.g. equipment breakdowns and ab-
senteeism so that a reliable model can be finally enhanced.
Such considerations have led to several methodological proposals aiming at deter-
mining the main causes of low productivity and off-time delivery. More recently, the
use of Discrete-event simulation (DES) has gained considerable attention in the indus-
try [3] [4] [5]. Some applications can be seen in construction sector [6] [7], chemical
industry [8] [9], food industry [10] [11], semiconductor manufacturing industry [12],
semi-process industry [13] and automobile sector [14] [15]. However, its implementa-
tion in pharmaceutical industry is largely limited. Additionally, even when DES can
provide a means to pretest changes in manufacturing systems before implementation in
an effective manner, the evidence base is poorly developed.
In this paper, we model the analysis lab of a pharmaceutical company first motivated
by a desire to establish a baseline against which a number of streamlining scenarios
may be evaluated. Another novelty lies in the use of DES to increase productivity in a
lab with a wide variety of products (52). Furthermore, once we have developed the
simulation model, we can analyze the impact of potential improvement scenarios. Par-
ticularly, we will focus on determining the adequate way to allocate the laboratory re-
sources so that tardy jobs can be also minimized. We will also endeavor to address the
issues identified in [2], mainly with regard to modeling decision alternatives and iden-
tifying critical parameters limiting system performance.
The remainder of this paper is organized as follows: In Section 2, a literature review
on DES applications in pharmaceutical industry is presented. Then, the proposed meth-
odology is explained in Section 3. In Section 4, results from a case study in a pharma-
ceutical lab are described and analyzed. Finally, Section 5 presents the conclusions.

2 Primary studies from the literature

In recent years, the Discrete-Event Simulation (DES) has been used as an important
tool for the diagnosis, evaluation, and improvement of operations and as support of the
decision-making process [16], since it is able to describe and represent the characteris-
tics of a real system with high fidelity [17]. There are several benefits derived from the
application of DES (e.g. increased operational efficiency, time reduction, cost savings
and customer satisfaction). However, these benefits have not been extended to all
companies and economy sectors [18], especially healthcare and pharmaceutical sectors
which present constant challenges due to the market dynamic, whereas high-quality
products are demanded at competitive prices and short delivery times.
We reviewed the reported scientific literature where different academic articles
showing the use of the DES technique were found [19]. In this regard, DES applications
with a focus on improving the operational efficiency in manufacturing environments
were first identified. For example, in [20], DES was used for production line balancing
aiming at reducing excess inventory, operational costs and delivery times. Also, there
are studies where DES has been applied in complex environments related to the
pharmaceutical industry, such as healthcare services. Here, DES was implemented for
process analysis and performance improvement measured in terms of operational
efficiency, service delivery times, appointment lead-time and waiting time in maternal-
child hospitals [18], elderly outpatient clinics, emergency departments [21, 22] and
hospital pharmacies [23].
When considering case studies relating to laboratory services and the pharmaceutical
industry, a few studies were found. In [24] performance of planning policies in a clinical
laboratory when addressing different demand scenarios. Also, DES has been found to
improve efficiency and effectiveness in the workflows of clinical laboratories [25].
DES applications in pharmaceutical companies also include the supply chain
optimization and manufacturer selection [26], the improvement of the decision-making
process in the biopharmaceutical industry, investment alternative selection [27] and the
reduction of operational inefficiencies associated with the equipment use and response
capacity of quality control laboratories supporting drug manufacturing process [28].
In light of the aforementioned facts, it can be concluded that studies directly concen-
trating on improving operational efficiency in pharmaceutical industry, with the use of
discrete-event simulation, are largely limited. Therefore, we implemented this tech-
nique in the present work in order to provide a useful decision-making tool that can be
used for supporting the improvement of productivity rate in realistic scenarios whilst
reducing the gap identified in the literature.

3 Proposed Methodology

For an appropriate implementation of DES in manufacturing systems from the pharma-

ceutical industry, it is critical to consider the number and range of pathways along the
entire product journey in addition to the multi-dimensional dynamic interactions affect-
ing the resource utilization, productivity rate and proportion of tardy jobs. Hence, it is
highly important to reach a satisfactory level of equivalence between the real manufac-
turing system and the simulation model in terms of structure, performance, and varia-
bility. Considering the nature of pharmaceutical manufacturing systems, it is therefore
relevant to reach a systemic progress instead of searching for local solutions. In this
regard, a 4-phase procedure (refer to Fig. 1) has been proposed to i) effectively identify
problems contributing to process inefficiencies, ii) assist production managers in deci-
sion-making, iii) allocate production resources properly and iv) consequently diminish
the proportion of tardy jobs and increase production rate. This methodology has been
created to be implemented in practical scenarios. Moreover, it is even more valuable
when considering the scant evidence base relating to the application of DES models as
stated in Section 1 and Section 2.

Fig. 1. Methodological approach for the implementation of DES models in pharmaceutical

companies: Diagnosis and evaluation of potential improvement strategies.

─ Phase 1 (Description of the pharmaceutical production process): The production

managers and operational staff are required to provide information on the variables
and process sequence so that the real manufacturing system can be fully and effec-
tively characterized. In addition, it is necessary to identify the cost parameters so
that we can later provide a financial analysis complementing the performance diag-
nosis. After this, the data concerning the aforementioned variables and parameters
should be adequately gathered from the company information sources so that high-
quality information can be incorporated into the simulated model. To this end, flow
and SIPOC (Supplier-Input-Process-Output-Customer) diagrams are highly recom-
mended to produce a detailed model of the real system [29]. This characterization
will be further deemed for the correct modeling of the pharmaceutical production
process.

─ Phase 2 (Input data analysis): After finishing the Phase 1, it is relevant to first
examine the presence of potential outliers for ensuring high-quality data. If some
outliers are detected, they should be then investigated to determine whether these
data represent an abnormal behavior of the system. If this statement is true, the out-
liers should be removed from the dataset. The next task is then to conduct an inter-
dependence test (e.g. scatterplot, run test and autocorrelation analysis) to verify the
randomness of data distribution (α = 0.05). Afterwards, a heterogeneity analysis
should be carried out in order to detect potential sub-groups of data. In this respect,
statistical methods such as Analysis of Variance (ANOVA), log-rank and Kruskal-
Wallis and log-rank can be useful for this purpose. If the data are found to be heter-
ogeneous, each sub-group must be modeled separately; otherwise, the dataset is rep-
resented by one probability distribution. Once this is finished, a goodness-of-fit test
 is used to define whether a stochastic model appropriately fits the data and then cal-
culate the distribution parameters that should be introduced into the simulation
model.

─ Phase 3 (Creation and validation of the DES model): A sophisticated simulation

tool is used to support the creation of a virtual representation of the pharmaceutical
manufacturing process. Furthermore, it contributes to user engagement by animating
the resources and product journey associated with the production system. To verify
the model reliability, key performance metrics and simulation run length are initially
established. Afterwards, 10 runs are carried out to estimate the sample size (number
of computational runs) that is required to represent the variability of the real-world
process. Once the computational runs are complete, a hypothesis test is performed
to determine whether the simulated model is statistically equivalent to the real man-
ufacturing system [30]. In this regard, if the p-value is greater than the alpha level
(0.05), the model is concluded to be realistic and suitable for pretesting. Otherwise,
it should be verified and modified to guarantee high reliability and usefulness.

─ Phase 4 (Definition and assessment of improvement scenarios): Useful interven-

tions are characterized by offering solutions whose implementation can be fully pre-
tested. In this sense, potential improvement strategies should be identified and then
assessed in terms of the previously defined performance metrics. The strategies are
designed with the aid of production managers and operational staff in order to guar-
antee that they are aligned with the organizational goals and can be applied without
violating existing restrictions (e.g. budget availability and quality constraints). After
this, a simulation model (modified version of the initial model) is created to pretest
each strategy before implementation. To this end, 10 runs are executed to calculate
the sample size (number of simulation runs) that will be used to statistically compare
the current pharmaceutical manufacturing process with each scenario considering
the predefined performance metrics of interest. If the resulting p-value is lower than
the alpha level (0.05), the proposed scenario is beneficial for the company. On the
contrary, it is concluded as non-significant and should not be then considered for
implementation.

4 An Illustrative example: Modelling an analysis lab from a

pharmaceutical company

4.1 Description of the pharmaceutical production process

The company under study has found that 35% of customers complained of tardy deliv-
ery. In addition, it was detected that during 2015, 30% of the analysis that were re-
quested to the laboratory, was released several days after the due date. Thus, consider-
ing the proposed methodology, a SIPOC diagram was developed to describe the entire
product journey from the analysis request to the elaboration of quality reports. Our
model was based on a 1-year prospective dataset extracted from the Production Man-
agement System (PMS) which evidences all the production orders received by the anal-
ysis lab between 1 January 2016 and 31 December 2016. PMS is a database that was
created for the scheduling, dissemination, and monitoring of production orders. To ef-
fectively identify the elements involved in the physicochemical analysis process, a
SIPOC (refer to Fig. 2) and flow diagrams (refer to Fig. 3) were prepared.

Fig. 2. SIPOC diagram for the sample analysis process of a pharmaceutical lab.

Fig. 3. Flowchart of the sample analysis process.

After providing a conceptual model of the sample analysis process, the modelers
identified the following process variables to be incorporated into the simulation model:
Time between arrivals for each material type (raw material, solid, trace, sterile, non-
sterile, supplies and semi-solid), processing time (raw material, solid, trace, sterile, non-
sterile, supplies and semi-solid), lead-time of external suppliers and cost per analysis.
4.2 Input data analysis
After gathering the data related to the variables identified in Sub-section 4.1and dis-
carding the presence of outliers, a run test was initially performed to establish whether
these variables were randomly sequenced. A summary of these tests is detailed in Table
1. In this case, all the variables were found to be independent since the p-values were
greater than the significance level (0.05).

Table 1. Results of intra-dependence tests

Process variable P- value Conclusion

Time between arrivals for raw material 0.054 Random
Time between arrivals for solid material 0.205 Random
Time between arrivals for trace material 0.068 Random
Time between arrivals for non-sterile material 0.74 Random
Time between arrivals for semi-solid material 0.892 Random
Time between arrivals for sterile material 0.326 Random
Time between arrivals for supplies 0.838 Random
Lead-time of external suppliers 0.07 Random
Processing time for raw material 0.818 Random
Processing time for solid material 0.818 Random
Processing time for trace material 1 Random
Processing time for non-sterile material 0.107 Random
Processing time for semi-solid material 1 Random
Processing time for sterile material 1 Random
Processing time for inputs 1 Random

After finishing the intra-dependence analysis, a heterogeneity test was performed for
each variable in order to detect sub-groups of data (refer to Table 2). In particular, a
Kruskal-Wallis test detected that the time between arrivals and processing time should
be modeled separately according to the type of material since the p-values were found
to be lower than the significance level (non-homogeneous data).

Table 2. Results of homogeneity tests

Variable type P-value Conclusion

Time between arrivals 0.0001

Non-homogeneous
Processing time 0.0060
Lead-time of external suppliers 0.0000
 Considering the randomness and heterogeneity of the process variables, probability
distributions should be thus defined through Goodness-of-fit tests. In this case, p-values
higher than the alpha level (0.05) provided good support for the probability assump-
tions. The stochastic expressions to be used for modeling the process variables in the
simulation model are enlisted in Table 3.

Table 3. Results of Goodness-of-fit tests

Process Variable P-value Stochastic expression

Time between arrivals for raw material 0.254 8 * BETA (0.554, 2.15) - 0.5
Time between arrivals for non-sterile material 0.326 LOGN (2.62, 3.56) - 0.5
Time between arrivals for trace material 0.093 29 * BETA (0.395, 5.12) - 0.5
Time between arrivals for semi-solid material 0.097 LOGN (2.67, 3.62) - 0.5
Time between arrivals for solid material 0.172 LOGN (1.63, 1.68) - 0.5
Time between arrivals for sterile material 0.106 WEIB(2.81, 0.533) - 0.5
Time between arrivals for supplies 0.077 51 * BETA (0.171, 0.688) - 0.5
Lead-time of external lab 1 0.118 UNIF (8.5, 22.5)
Lead-time of external lab 2 0.098 WEIB(13.7, 1.3) + 8.5
Lead-time of external lab 3 0.164 27 * BETA (0.509, 0.525) + 6.5
Lead-time of external lab 4 0.115 WEIB (9.18, 1.39) + 6.5
Processing time for raw material 0.237 783 * BETA (0.828, 0.592) + 429
Processing time for non-sterile material 0.803 360 * BETA (0.528, 0.459) + 480
Processing time for trace material 0.221 215 * (0.0438, 0.165) BETA + 22
BETA (0.339, 0.0805) * 1.21 * 10-3+
Processing time for semi-solid material 0.623
003 + 482
Processing time for solid material 0.554 EXPO (314) + 117
Processing time for sterile material 0.187 UNIF (480, 840)
Processing time for supplies 0.256 UNIF (210, 408)

4.3 Creation and validation of the DES model

The simulation model (refer to Fig. 4) was designed with the aid of Arena 14.0 ® soft-
ware whereas the basic process modules, the collected information and the conceptual
model were simultaneously incorporated into the model. To ensure the reliability of the
simulation results, we ran the model for a time period of 245 days with 8 hours per day.
In addition, 10 replications were executed to calculate the required sample size (n = 5)
for adequately representing the system variability. To validate the model measure the
current performance (productivity rate), 1250 analyzes/year (390 raw materials, 270
solid products, 200 traces, 150 non-sterile liquids, 160 semi-solids, 60 sterile materials
and 20 samples for input analysis) was established as the theoretical quantity μ. Simu-
lation results were later evaluated with a t student hypothesis test (𝐻𝑜 : 𝜇 =
1250 𝑎𝑛𝑎𝑙𝑦𝑠𝑒𝑠|𝐻𝑎 : 𝜇 ≠ 1250 𝑎𝑛𝑎𝑙𝑦𝑠𝑒𝑠) by using Minitab ® software. A p-value =
0.887 and 95% IC [1199.1; 1307.8] evidenced that there is enough statistical evidence
to affirm that the simulation model is a reliable representation of the physicochemical
analysis laboratory under study. Hence, it can be used for further analysis, diagnosis,
and pretest.

Fig. 4. Simulation model of the physicochemical analysis lab under analysis

4.4 Definition and assessment of improvement scenarios

In spite of DES models provide a means to effectively pretest changes in manufacturing
systems before implementation, little research work has been done to evaluate potential
improvement scenarios [22]. Therefore, the present study aims to validate two proposed
scenarios (refer to Table 4): i) S1: Reallocation of 4 analysts in 3 work shifts (Analyst
1: 6 am – 2 pm; Analyst 2: 2 pm – 10 pm; Analyst 3: 10 pm – 6 pm; Analyst 4: 8 am –
12 m and 2 pm – 6 pm) and ii) S2: Redistribution of functions (1 worker from the
Maintenance Department is assigned to perform the machine setup which is currently
executed by analysts who spend two hours a day during this process). However, the S1
is suggested to be implemented since it is cost-effective in terms of productivity rate
evidenced by a significant difference between the scenarios (326 analyses – 29.87%).
In addition, although the S1 investment is significantly higher than required in S2, its
cost per additional analysis is found to be lower than S2. In addition, the proportion of
tardy jobs in S1 is 0% whilst in S2 is 22.64% which demonstrates a superior perfor-
mance of Scenario 1 over Scenario 2.

Table 4. Operational and economic analysis of potential improvement scenarios

Potential Productivity Number of Improvement Investment Cost per

improvement rate additional percentage (US$) additional
scenario (analysis) analysis analysis (US$)

S1 1583 490 44,87 $ 1478.44 $ 3.02

S2 1257 164 15,00 $ 512.85 $ 3.12
Conclusions

Pharmaceutical manufacturing systems are complex to model due to the wide variety
of pathways and activities that may derive from the drug nature. Therefore, it is highly
suggested that the modelers work closely with the production managers and operational
staff in order to ensure that the simulation models are statistically comparable to the
real system so that potential improvement scenarios can be effectively pretested before
implementation.
A critical aspect is the availability of high-quality datasets. In this regard, DES mod-
els will be thoroughly described depending on the available information. Of course, this
ends up with affecting the reliability and robustness of the resulting decisions. Hence,
it is relevant to count on the engagement of the pharmaceutical companies involved in
the project with the goal of developing complete simulation models.
The proposed methodology enables production managers to create integrated models
representing the pharmaceutical manufacturing systems. Nevertheless, it can be com-
plemented with other techniques in order to provide more detailed models supporting
further analysis on the process. For future work, it is intended to include interactions
with other departments aiming at offering more focused improvement scenarios.
The intervention here described presented the use of DES models in a pharmaceuti-
cal analysis lab. Based on the outcomes, it can be concluded that S1 (44.87%) provides
a better productivity rate than S2 (15.0%). This enables decision-makers to address the
problem of insufficient drug supply and increases the competitiveness of pharmaceuti-
cal companies in international markets.

Acknowledgments

The authors would like to thank the support of INCOBRA Laboratories, a company
from the pharmaceutical sector, where this study was implemented. Additionally, we
fully appreciate the collaboration of Eng. Giuseppe Polifroni Avendaño who provided
good support during this process.

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