A Discrete-Event Simulation Study of Multi-Objective Sales and Operation Planning Under Demand Uncertainty: A Case of the Ethiopian Automotive Industry

Abstract

Sales and operation planning is one of the major categories of supply chain planning that enables the balancing of demand with supply through the integration of internal functions as well as external supply chain members. The major issues are its large scale, dynamic, multi-objective nature and presence of uncertain parameters. Handling uncertainty, extending the level of integration, enhancing collaboration, and contextualization of the models already developed in different industrial situations are the gaps identified in the literature. This research aims to develop a discrete-event simulation model from the literature in the context of the Ethiopian automotive industry and extend the level of collaboration to suppliers and customers. The industry’s sales and operation planning process is surveyed to develop the model as a decision support system that can be utilized for understanding the system behavior, evaluation of manufacturing flexibility, and inventory control policies. The research findings demonstrate that the customer service level and total profit can be significantly improved through the proposed joint primary and negotiated backup supply policy with price revision. Managerial implications that are expected to improve the technical capability of Ethiopian automotive industries are also highlighted.