A Simulation Model for Multi-Product Inventory Control Management

Abstract

A simulation based-decision support system for multi-product inventory control management is developed. The system permits management to obtain an inventory system-wide view of the effect of changes in decision variables on the performance measures of a furniture manufacturing firm. The simulation model considers the effect of variations in demand, re-order point, stock-control level, time between reviews, and lead time. The decision support system generates policy scenarios based on management specifications. The effect of each scenario on system performance is then analysed. A set of search methods is combined with the DSS to aid in the optimisation process. The developed network consists of three basic sub-networks. The first sub-network represents the demand, back- order, and stock components of the system. The second network represents the periodic review process with stock control levels for each product. The third sub-network performs profit and cost calculations under normal circumstances and when lost sales are present.