INDUSTRIAL DESIGN

PROJECT

Advisor: Dereje G. (MSc)

Prepared by:
Olyad Teshome
Abenezer Mulatu
Hagu Gidebo
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Abdi Dengia AAHO TEAM 1
 THE ANALYSIS
AND SIMULATION OF A
SUPPLY CHAIN WITH ARENA
SIMULATION SOFTWARE

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 CHAPTER ONE

INTRODUCTION

1.1 Background of study

A supply chain is a complex network of organizations, people, activities,
information, and resources involved in the creation and delivery of a product or
service to the end customer. The performance of a supply chain is critical to the
success of an organization, as it impacts the level of customer satisfaction,
profitability, and overall competitiveness Meindl, P. (2016): (Supply chain
management: Strategy, planning, and operation,

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 Arena Simulation Software is a popular tool used for the analysis and
simulation of supply chains. It allows users to create realistic models of
supply chain systems and test different scenarios to evaluate their impact on
system performance. The software is capable of simulating a wide range of
supply chain processes, including production, inventory management,
transportation, and customer service
The purpose of this project is to analyze and simulate a supply chain using
Arena Simulation Software. The study will focus on a specific supply chain
system and will aim to identify areas for improvement in terms of efficiency,
productivity, and customer service. The results of the study will provide
valuable insights into the behavior of the supply chain system, as well as
recommendations for how it can be optimized to improve overall
performance.
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 The Supply Chain Structure
Third-party logistics (3PL) is a special form of
outsourcing that relates to logistical processes.

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 1.2 Statement of the Problems

The supply chain management process involves a complex network of

activities, resources, and organizations, which are essential for the creation
and delivery of a product or service to the end customer. However, this
process can be hindered by inefficiencies, bottlenecks, and other issues that
can negatively impact the overall performance of the supply chain. it has
become challenging for organizations to optimize their supply chain
operations. Inefficiencies in the supply chain can result in increased costs,
delays in delivery, and reduced customer satisfaction.

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 The problem statement for this project is thus to identify the critical challenges
and inefficiencies in the supply chain process and assess the impact of changes to
improve its performance using Arena simulation software. The project aims to
provide insights and recommendations to optimize the supply chain process and
improve the efficiency and profitability of businesses.
1.3 Objectives
1.3.1 General objectives:

The general objective of this project is to analyze and simulate a supply chain
using Arena software to identify areas for improvement and optimize the supply
chain operations.

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 1.3.2 Specific Objectives:

1. To identify the bottlenecks and inefficiencies in the supply chain process.

2. To evaluate different scenarios using the simulation.

3. To recommend strategies for improving the supply chain performance based on

the simulation results.

1.4 Scope of the project

The analysis and simulation of a supply chain with Arena software will involve
the following activities like; gathering data on the current supply chain process,
including information on suppliers, transportation, inventory management, and
customer demand. It is also modeling creation by developing a simulation model
in Arena software to replicate the current supply chain process.
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 Then running the simulation model to identify bottlenecks, inefficiencies, and
areas for improvement in the supply chain process. Also, Scenario can evaluate
different scenarios using the simulation tool to determine the impact of changes
on the supply chain performance.
1.5 Significance of the project

The project's significance lies in its ability to provide organizations with a

comprehensive understanding of their supply chain operations and identify areas
for improvement. The use of simulation tools like Arena software allows for the
creation of virtual models that accurately reflect the complexities of real-world
supply chain systems.

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 CHAPTER TWO

LITERATURE REVIEW
2.1 Supply chain

A supply chain is a complex network of organizations and activities involved in the

creation and delivery of a product or service to the end customer. According to the Council
of Supply Chain Management Professionals (CSCMP), supply chain management
encompasses the planning and management of all activities involved in sourcing,
procurement, conversion, and logistics management activities.

The goal of supply chain management is to optimize and streamline the flow of goods,
services, and information from suppliers to customers, while minimizing costs and
maximizing value. Effective supply chain management can help companies improve
efficiency,
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A A H O T Eservice.
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 There are a number of factors that can impact the efficiency and effectiveness of
a supply chain, including supplier relationships, inventory management,
transportation, and technology.

The use of simulation tools in supply chain management has been a topic of
research for several years. According to Krajewski et al. (2018), simulation
models are used to evaluate the performance of supply chains and identify areas
for improvement

Similarly, Chakraborty and Sarker (2017) emphasize the importance of

simulation tools in supply chain management. They suggest that simulation
models can be used to analyze the impact of various factors such as demand
variability, lead time, and inventory levels on supply chain performance.
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 2.2 Simulation and Analysis
Simulation and analysis are two crucial tools that have widespread applications in various
fields, including engineering, science, and business. Simulation involves creating a model
that mimics the behavior of a real-world system or process, which can then be used to
predict the system's behavior under different conditions. Analysis, on the other hand,
involves examining data or information to gain insights and make informed decisions,
Nicol, D. M. (2015), Discrete-event system simulation. Pearson.
Simulation and analysis are often used together to solve complex problems and make
informed decisions. For example, in engineering, simulation can be used to test the
performance of a new product design, while analysis can be used to evaluate the results and
make improvements.

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 2.3 Rockwell Arena simulation software

Rockwell Arena is a simulation software developed by Rockwell Automation. It

is used for modeling and analyzing complex systems and processes, and is
particularly useful in manufacturing, logistics, and supply chain management.

The software uses a discrete event simulation approach, which means that it
models the system as a series of events that occur over time. This allows users to
simulate the behavior of the system and identify bottlenecks, inefficiencies, and
other potential issues.

Arena comes with a wide range of modeling tools and features, including a drag-
and-drop interface for creating models, detailed statistical analysis capabilities,
and the ability to model complex systems with multiple stages, resources, and
decision points, Sturrock, D. T. (2014).
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 One of the key benefits of using Arena is that it allows users to test and
optimize their systems in a risk-free environment. By modeling the
system before implementing changes, users can identify potential issues
and make informed decisions about how to improve efficiency and
reduce costs.

Arena is also highly customizable, with a range of add-ons and

extensions available to meet the specific needs of different industries
and applications.
In this project, Arena is used to model and simulate a supply chain. The
software allows users to create a detailed model of the supply chain,
including various stages such as procurement, production, inventory
management, and distribution.
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 Compared to other simulation software, Arena has several advantages. It offers a
powerful modeling environment that enables users to create detailed models of
complex systems. It also provides advanced analysis tools that allow users to analyze
the performance of the system under different scenarios. Additionally, Arena is known
for its ease of use and flexibility, making it a popular choice among simulation
software users.

Overall, Rockwell Arena is a powerful tool for modeling and analyzing complex
systems and processes, and is widely used in industries such as manufacturing,
logistics, and supply chain management.

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 2.4 Application of Arena simulation software in supply chain

Arena simulation software is widely used in supply chain management

to model and analyze different aspects of supply chain systems.
According to a study by Li et al. (2017), Arena can be used to simulate
inventory levels and evaluate the impact of different inventory policies
on the supply chain. This can help companies optimize inventory levels
and reduce costs.
In addition, Arena can be used to simulate production scenarios and
evaluate the impact of changes in production schedules, equipment, and
(Study of Production Planning Optimization Based on Arena
Simulation. International Journal of Control and Automation, (2018))
personnel on the supply chain. Warehouse management is also an area
where Arena can be applied.
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 2.5 Background of the company

Yes, Water is a leading bottled water company in Ethiopia that produces high-
quality drinking water. The company was founded in 2012 with the aim of
providing clean and safe drinking water to the people of Ethiopia.

The correct name of the company is "Yes Brands Food and Beverages Plc."
The company is located in Addis Ababa, Ethiopia.

Yes Water has a production capacity of 24,000 bottles per hour, which is
equivalent to 576,000 bottles per day. The company uses state-of-the-art
technology and equipment to ensure that its products meet the highest quality
standards.
The organizational structure of Yes Water is well-defined, with a team of
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highly skilled professionals working together to ensure the smooth operation
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of the company.
 CHAPTER THREE

MATERIALS AND METHODS

3.1 Materials

In the project "The analysis and simulation of a supply chain with Arena," the primary
material used was the Arena Simulation Software. This software was used to model,
simulate, and analyze the supply chain of a ma (Simulation modeling and analysis for
warehouse operations: A case study. Simulation Modelling Practice and Theory,,
(2015))manufacturing company. Additionally, other materials used in the project may
include the following:

1. Primary data: The project required data from various sources such as sales,
inventory, and production data. This data was used to model the supply chain and
simulate different scenarios.
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 3.2 Methodology

Components:

- Arena simulation software

- Data on the supply chain (Secondary data)

- Relevant documentation
Here are some potential costs that could be related to product quality or on-time
delivery of quality assurance costs, this includes the cost of ensuring that the
water meets the quality standards set by the company. This could include
testing, inspections, and certification fees. And, Production costs are the costs
related to the manufacturing process of the water. This includes the cost of raw
materials, labor, and equipment like transportation costs; this includes the cost
of transporting the water from the manufacturing facility to the distribution
centers or customers. Also, Packaging costs:
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 3.2.1 Data preparation

Data preparation is one of the most crucial steps in any data modeling process.
It involves taking raw data and transforming it into a format that can be easily
analyzed and understood by the modeling algorithm. The goal of data
preparation is to ensure that the data is accurate, complete, and consistent. This
can involve a variety of tasks such as data cleaning, data transformation, and
data normalization.

Data cleaning involves identifying and correcting errors, missing values, and
inconsistencies in the data.

Data normalization is the process of scaling the data to a common range so that
different variables can be compared on an equal footing.
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In order to prepare data for modeling on Input Analyzer, the first step is to import the
data into the software. Once the data is loaded, it is important to visualize the data to
gain a better understanding of the relationships between the variables. This can be
done using histograms, scatterplots, and other data visualization tools.

After visualizing the data, the next step is to clean and transform the data as needed.
This may involve removing outliers, filling in missing values, and transforming the
data to fit a specific distribution.

Overall, data preparation is a crucial step in any data modeling process. By carefully
preparing the data, you can ensure that the model is accurate, reliable, and provides
useful insights into the underlying data.
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 3.2.2 Project design

The project design involved creating a model of the supply chain system using the
Arena simulation software. The model included all the stages of the supply chain
and their interdependencies, as well as the parameters for each stage such as lead
times, production capacity, and inventory levels.

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 CHAPTER FOUR
MODEL DEVELOPMENT
4.2 Identifying Bottlenecks
Based on the simulation results provided, there are a number of potential
bottlenecks in the system that may be causing delays and inefficiencies. The
analysis reveals that the average wait times in the checking, loading, and delivery
order queues are all quite long, which suggests that these areas may be
bottlenecks. In addition, the high work in progress of 20.923 entities at any given
time indicates that there may be a bottleneck in resource utilization or scheduling.

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 Possible strategies to address these bottlenecks may include increasing
the capacity of the queues, optimizing resource utilization, and
minimizing work in progress. By increasing the capacity of the queues, it
may be possible to reduce wait times and improve the efficiency of the
system.

Finally, the simulation results indicate that there are several potential
bottlenecks in the supply chain system that are causing delays and
inefficiencies. Further analysis is required to determine the root causes of
these bottlenecks and develop targeted strategies to address them. By
implementing these strategies, it may be possible to reduce wait times,
improve resource utilization, and minimize work in progress, resulting in
a more efficient and effective supplyA Achain
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 CHAPTER FIVE

RESULTS AND ANALYSIS

One possible result of the simulation could be to identify bottlenecks in the

loading and unloading process. The model could help determine the optimal
number of workers and equipment needed to maximize throughput and
minimize waiting times. It could also help identify areas where safety or
environmental concerns may arise during the loading and unloading process.

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 5.1 Results
The simulation data reveals several key metrics related to the performance of the
supply chain. Firstly, Entity 1 spends an average of 1.8 hours in the system, with
an average wait time of 1.41 hours. The queueing times for checking, loading,
and delivery order queues are also quite long, with average wait times of 1.4,
2.64, and 1.29 hours, respectively. The analysis also highlights the significant
amount of work in progress in the system, with an average of 20.923 entities in
progress at any given time.

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 5.2 Analysis

The long queueing times and high work in progress suggest that there may be
bottlenecks in the system that are causing delays and inefficiencies. The
analysis indicates that there may be opportunities to improve the system by
reducing queueing times, optimizing resource utilization, and minimizing
work in progress. This could involve a range of strategies, such as increasing
the capacity of queues, balancing the workload across resources, or
optimizing the scheduling of resources.
One possible strategy would be to increase the capacity of the checking,
loading, and delivery order queues.

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 5.3 Improved models and possible scenarios

Changing distribution center

Based on the simulation results, it seems that the average time for Entity 1 (which is
not specified in the summary) to complete their process is 1.0626 hours. The average
wait time for Entity 1 is 8.1949 hours, which could potentially be improved to increase
efficiency. The four queues listed in the Tally Variables all have average waiting times
ranging from 3.3959 to 4.0957 hours, which could also be improved.

The Discrete-Change Variables show that the number of entities in WIP (Work in
Progress) is 28.832, and the loaded trucks to distribution center queue has an average
of 9.4215 entities. The other three queues have lower averages, which could mean they
are moving more efficiently.
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 Changing vehicle route

Based on the summary results provided, it seems like the simulation was analyzing a
process that involves Entity 1. The Tally Variables section shows the average,
minimum, and maximum values of different time periods for Entity 1, such as VA
Time, NVA Time, Wait Time, Tran Time, Other Time, and Total Time. The Discrete-
Change Variables section shows the change in WIP (Work In Progress) for Entity 1.
The Outputs section shows the number of entities that entered and exited the system,
as well as the total number of entities that exited the system.

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 CHAPTER SIX

CONCLUSSION AND RECCOMENDATION

Based on the analysis and simulation of the supply chain with Arena, it
is clear that there are significant opportunities to improve the system's
performance. The simulation data revealed that there are several areas of
the supply chain that could benefit from improvement, including long
queueing times and high work in progress. By addressing these issues, it
may be possible to improve the efficiency of the supply chain and reduce
lead times.

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 Recommendation:

To improve the performance of the supply chain, we recommend the

following actions:

1. Analyze the data from the simulation to identify areas of the supply
chain that are causing delays and inefficiencies. This could involve
examining queueing times, work in progress, and other relevant metrics.

2. Develop strategies to reduce queueing times and improve resource

utilization. This could involve increasing the capacity of key processes,
optimizing the scheduling of resources, or balancing the workload
across resources.
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 By implementing these recommendations, it may be possible to
significantly improve the efficiency of the supply chain and
reduce lead times. This could help to enhance customer
satisfaction, reduce costs, and improve overall business
performance.

……………………………………………………………………

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 THE
END

THANK
YOU
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