Using discrete event simulation in supply chain planning

Supply chains are difficult to plan because they involve complex relationships that influence supply chain performance. In this paper, discrete-event simulation (DES) is discussed in order to identify if it could be a technique used to improve supply chain planning. Two DES models have been developed and are used in this paper to find out whether DES could be a technique for unraveling the complexity of supply chains. One DES model represents a retail supply chain focusing on material handling and order process behaviors and investigates how the supply chain could behave and perform if wireless identification technology were applied throughout the supply chain. The other DES model describes a manufacture’s supply chain with the purpose of investigating alternative order processes and to visualize the behavior of the supply chain. A result of developing and using DES is that a better insight into the system parameters and their interaction with their context is obtained. DES was used for analyzing and evaluating dynamic aspects as well as the influence of variance on the supply chains, which could be used to support decision making and the understanding of the supply chains. DES has the ability to tell how a supply chains performs and behaves over time when different rules and policies are applied. Testing different scenarios by adjusting parameters and procedures means that supply chain performance and behavior can be explored without disrupting the real system. This in turn means that DES could be confidently used as a technique in supply chain planning.