SUPPLY CHAIN

ANALYTICS

GROUP ASSIGNMENT

TOPIC
IMPLEMENTATION OF CONTINUOUS TIME
SIMULATION MODEL FOR SCM IN FMCG SECTORS

SUBMITTED BY
KIRTIRAJ SAHOO - MBA/21-23/10

SHUAIB JAMIL - MBA/21-23/30

PRATYUSH JENA - MBA/21-23/17

SANSAYA NAYAK - MBA/21-23/26

MILINA PRIYADARSINI - MBA/21-23/39

 INTRODUCTION
Continuous time simulation models for supply chain management in the fast-
moving consumer goods (FMCG) sector are typically implemented using
specialized software tools such as AnyLogic, Simio, or Arena. These models
can be used to simulate the entire supply chain, from the raw material
procurement to the delivery of finished goods to customers, and can help
identify areas where operational efficiency can be improved.

One example of a continuous time simulation model for supply chain

management in the FMCG sector is the simulation of a manufacturing plant
producing packaged food products. The model can be used to simulate the flow
of raw materials through the plant, as well as the production and packaging
processes.

The simulation model can also take into account factors such as machine
downtime, inventory levels, and transportation delays, and can be used to
optimize the use of resources such as labor, machines, and raw materials. For
example, the model can be used to identify the optimal amount of raw material
inventory to maintain, or to determine the most efficient production schedule for
the plant.

In addition, the simulation model can be used to test various scenarios, such as
changes in demand, supply disruptions, or changes in production capacity, and
to assess the impact of these scenarios on the overall supply chain. This can
help FMCG companies to better manage risk and make more informed
decisions about their operations.

Overall, continuous time simulation models are a powerful tool for FMCG
companies looking to optimize their supply chain operations and improve
operational efficiency.

A continuous time simulation model for supply chain management is a

mathematical representation of a supply chain system that is designed to mimic
real-world supply chain dynamics. This type of simulation model allows for the
evaluation of different scenarios and the analysis of the impact of various
decisions on the performance of the supply chain.
The model typically includes multiple layers, such as suppliers, manufacturers,
distributors, retailers, and customers, as well as various processes and activities,
such as production, transportation, inventory management, and demand
forecasting. The model can also incorporate factors that influence the supply
chain performance, such as market demand, lead times, production capacity,
and supply chain disruptions.

In a continuous time simulation model, the system is simulated over time, with
changes occurring in real-time. This allows for the analysis of dynamic behavior
of the supply chain, such as the impact of sudden changes in demand or supply
disruptions.

One approach to building a continuous time simulation model for supply chain
management is to use a software package that is specifically designed for this
purpose. There are several commercial software packages available that offer
advanced simulation capabilities, such as Arena, Simul8, and AnyLogic.

Alternatively, a continuous time simulation model can be developed using a

programming language such as Python or Matlab, which can be customized to
the specific needs of the supply chain system.

Overall, a continuous time simulation model can be a powerful tool for supply
chain management, as it allows for the evaluation of different scenarios and the
analysis of the impact of various decisions on the performance of the supply
chain.

Continuous time simulation models can be used in FMCG (Fast Moving

Consumer Goods) supply chain management to optimize various aspects of the
supply chain, such as inventory management, production scheduling, and
distribution planning. These models can provide insights into how different
factors affect the performance of the supply chain, and help decision-makers
make informed decisions.

One common type of continuous time simulation model used in FMCG supply
chain management is the discrete event simulation (DES) model. This model
breaks down the supply chain into discrete events, such as order placement,
production, and delivery, and simulates the flow of goods and information
through the supply chain over time. DES models can be used to optimize
various aspects of the supply chain, such as inventory levels, production
schedules, and delivery routes.
Another type of simulation model that can be used in FMCG supply chain
management is the system dynamics model. This model is a more holistic
approach that considers the entire supply chain as a dynamic system, with
various feedback loops and delays that affect the performance of the system
over time. System dynamics models can be used to optimize various aspects of
the supply chain, such as demand forecasting, capacity planning, and pricing
strategies.

Overall, continuous time simulation models can be a powerful tool for FMCG
supply chain management, helping companies to optimize their operations,
reduce costs, and improve customer satisfaction.

Continuous time simulation models are commonly used in supply chain

management across various sectors, including the fast-moving consumer goods
(FMCG) industry. FMCG companies often face challenges related to demand
variability, seasonality, supply chain disruptions, and inventory management,
among others. Simulation models can help managers understand the impact of
various factors on the supply chain and make informed decisions to improve
efficiency, reduce costs, and increase customer satisfaction.

In the FMCG industry, continuous time simulation models can be used to model
various aspects of the supply chain, including production, inventory
management, distribution, and logistics. For example, a simulation model can
be used to analyze the impact of changes in production capacity on inventory
levels and customer service levels. The model can also be used to evaluate
different inventory policies, such as reorder points and safety stock levels, and
their impact on supply chain performance.

Moreover, simulation models can help FMCG companies optimize their

distribution networks by analyzing different scenarios, such as changing the
number and location of warehouses, and evaluating the impact on transportation
costs, lead times, and customer service levels. Simulation models can also be
used to analyze the impact of supply chain disruptions, such as natural disasters
or labor strikes, on the supply chain and develop contingency plans to mitigate
the impact.

Overall, continuous time simulation models are a powerful tool for FMCG
companies to optimize their supply chain operations and improve their
competitive position in the market.
Example 1:

One example of a continuous time simulation model for the FMCG sector could
be a supply chain model that includes the flow of products from manufacturers
to distributors and retailers.

The model would use differential equations to represent the continuous flow of
goods and the interactions between different actors in the supply chain.

For instance, the model could include variables such as production rates,
inventory levels, shipping times, and demand forecasts, and use them to
calculate the optimal flow of goods through the supply chain.

To illustrate, suppose we have a simple supply chain with a single

manufacturer, distributor, and retailer. The manufacturer produces a product at a
rate of 100 units per hour, which is then shipped to the distributor at a rate of 80
units per hour. The distributor then ships the product to the retailer at a rate of
60 units per hour. Finally, the retailer sells the product to customers at a rate of
40 units per hour.

Using a continuous time simulation model, we could represent this supply chain
as a set of differential equations that describe the flow of goods between the
different actors. For example:

dM/dt = -100

dD/dt = 100 – 80

dR/dt = 80 - 60 - 40

where M, D, and R represent the inventory levels of the manufacturer,

distributor, and retailer, respectively, and the terms on the right-hand side
represent the flow of goods into and out of each inventory.

Example 2:

One example of using a continuous time simulation model in the FMCG sector
could be to forecast demand for a particular product. Let's say we want to
forecast demand for a certain type of shampoo.

We can use a continuous time simulation model to simulate how demand for the
shampoo would vary over time. The model could take into account factors such
as seasonality, promotions, and competitor activity.
To implement the model, we would first collect historical data on demand for
the shampoo, as well as data on relevant external factors (such as weather and
competitor promotions). We would use this data to calibrate the model and
estimate the parameters that describe the underlying demand process.

Once the model is calibrated, we can use it to generate simulated demand

scenarios for the future. We can use these scenarios to assess the impact of
different marketing and promotional strategies, as well as changes in external
factors. For example, we could simulate the impact of a price increase or a new
competitor entering the market.

By using a continuous time simulation model, we can gain a more detailed and
nuanced understanding of demand dynamics over time. This can help us make
more informed decisions about product development, marketing strategy, and
inventory management.

Example 3:

One common approach for simulating supply chains in the FMCG sector is to
use a continuous-time simulation model, which allows for the simulation of
stochastic events and provides a more accurate representation of real-world
dynamics compared to discrete-time models.

Here's an example of how a continuous-time simulation model could be used in

the FMCG sector:

Suppose a company produces a popular snack food product that is sold through
multiple channels, including online retailers, brick-and-mortar stores, and
distributors. The company wants to use a simulation model to predict how
changes in demand and supply chain disruptions may affect its inventory levels
and order fulfillment.

The model would be designed to simulate the supply chain process over a
certain period of time, such as a year. It would take into account various factors,
including demand variability, lead times, transportation times, production
capacity, and inventory policies.

For example, the model could simulate the following steps:

Customer demand: The model would simulate the demand for the snack food
product based on historical sales data, market trends, and other relevant factors.
The demand could be modeled using a stochastic process, such as a Poisson or
normal distribution.

Order placement: Once the demand is known, the model would simulate the
order placement process. This would include the time it takes for the order to be
processed and sent to the appropriate warehouse or production facility.

Production and inventory: The model would simulate the production process
and inventory levels at each warehouse or production facility. This would
include the time it takes to produce the product, the amount of inventory
available, and the inventory policies used to determine when to reorder.

Shipping and delivery: Once the product is produced, the model would simulate
the shipping and delivery process. This would include the time it takes for the
product to be shipped to the appropriate distribution center, the time it takes for
the product to be delivered to the customer, and any potential delays or
disruptions in the shipping process.

By simulating each of these steps in the supply chain process, the model could
provide insights into how changes in demand or supply chain disruptions may
affect the company's inventory levels and order fulfillment. The model could
also be used to test different inventory policies and supply chain strategies to
identify the most effective approach for the company.