Simulation study of inventory cost control based on system dynamics

Abstract

Abstract In this study, we employ system dynamics to analyze the interplay between various factors influencing inventory cost control, resulting in a comprehensive subsystem model. The inventory strategy subsystem, based on the pipeline delay function, and the inventory cost subsystems, considering the actual situation of the enterprise, are combined to construct the inventory cost control system dynamics model. According to the validity test of the inventory cost control model, there are less than 10% simulation errors in the total transportation cost and total inventory cost data of the enterprise, and the model’s reliability is high. The simulation experiment of the model on the inventory cost control of the enterprise shows that the total inventory cost decreases to 4,398,330 yuan on the 100th day after shortening the order delay time, and the total inventory cost decreases by 1,160,450 yuan on 32 days after controlling the arrival delay time. This dynamic model proves highly effective and offers a dependable approach to managing inventory costs across various enterprises.