Novel Simulation Optimization Approach for Supply Chain Coordination and Management

Abstract

The importance of supply chain management is paramount nowadays and this research seeks ways for better supply chain coordination. We present a roadmap for implementing true digital replicas of physical supply chains based on a disruptive simulation modeling approach. These digital replicas can enable the comparative evaluation of existing Just-In-Time (JIT) control policies for the first time without the unrealistic assumptions of existing studies in the literature. These realistic supply chain simulation models have the prospect of giving us better understanding of their behavior and of their complex dynamics. We provide guidelines for using the digital replicas and advanced optimization approaches to derive novel supply chain coordination policies pushing the field of JIT control beyond the state-of-the-art. An equally important contribution of this research is that it advances the field of hybrid discrete event-system dynamics (DES-SD) simulation with the prospect of pushing Systems Engineering to the next level. This research discusses theoretical foundations for mixing DES with SD simulation, and explores technical aspects and implementation details. The implications of this extent well beyond the supply chain field since both DES and SD have dozens of application areas including manufacturing, service systems and economics, social sciences, respectively. The paper is concluded with a discussion on the potential impact of the proposed approach including insights for practitioners, applicability of scientific results in industry and prerequisites for business process re-engineering.