Dynamic Evaluation of Production Policies: Improving the Coordination of an Ethanol Supply Chain

Abstract

This paper uses System Dynamics modeling and process simulation to explore coordination in two logistic processes (procurement and production) of the supply chain of an ethanol plant. In that sense, three production scenarios are evaluated to identify: a) stock movement according to current inventory policies, and b) the critical variables affecting the coordination for these two processes. Since the main goal in the company is to meet customer demand, this research incorporates sales forecasting, and four performance indicators to evaluate the state of the processes: 1) average percentage of demand satisfaction, 2) maximum amount of ethanol in excess, 3) available ethanol at the end of the year, and 4) inventory costs. To model the case study, the change in production yield and specific constraints for the chain are considered. The simulation results show that System Dynamics modeling can be used to observe the effects of policies on inventory, and meeting the demand in a real system. It also can define the coordination for a supply chain and give information to improve it. The developed model uses STELLA® software to simulate the logistic processes and execute the evaluation employing the performance indicators.