Design and performance evaluation of supply networks: a simulation study

This paper presents a simulation tool for the design and performance analysis of supply networks. The tool, developed under MS Excel™ and properly set up for this purpose, reproduces a fast moving consumer goods (FMCG) supply network, and incorporates viable input data taken from previous studies in that field. We analyse four network configurations, stemming from the combination of different numbers of echelons and of facilities per echelon. As further factors, we consider reorder policy, demand behaviour, demand stochasticity, procurement lead time and service level delivered to customers. Overall, we examine 128 scenarios, for which we assess, as performance parameters, the total costs of the network (and the related cost components), the bullwhip effect, the throughput time of items along the chain and the waiting time of customers at the retail store due to out-of-stocks. A detailed effect analysis identifies the impact of the network configuration and operating conditions on the results observed, with the ultimate aim to investigate how the performance of the network varies as a function of the parameters set. From the analysis, some key guidelines for the proper design of FMCG supply networks are elaborated