A systems simulation approach to multi-echelon inventory analysis

Abstract

Inventory and Distribution of Items in a Multi-echelon System (IDIMS) is a FORTRAN-based simulator designed to analyze the actions and reactions of a multi-level inventory/distribution system. The described program is capable of modeling a structure consisting of up to four levels of distribution with a maximum of 14 'entities' or distinct storage locations within the system. The user orientation of the IDIMS program is demonstrated by the ability to simulate many possible system structures. Additional versatility is attained through data input that specifies various stochastic demand patterns and leadtimes for up to ten items within the structure. The IDIMS user may also specify different inventory management policies, diverse forecasting techniques, production limitations, and two methods of inventory parameter adjustment. Presentation of the design, development, implementation and validation phases of the simulator are included along with several scenario applications of IDIMS which reveal the power and flexibility of the program. The first scenario models a small distribution system and compares different inventory management policies at the warehouse level during a period of increasing demand for a single item. The second scenario simulates a larger system that has storage limit problems for the two items. Possible solutions for the problems are simulated and compared. The last scenario models five items through a large system. The output reports for one of the items is analyzed for possible problem areas and to show the wide range of inventory statistics generated by the program.