Track: Simulation Competition

Abstract

Firms worldwide attempt to minimize the total cost of sourcing, aggregating, and delivering products to demand centers. Specifically, in this paper, we model a single-tier supply chain with m suppliers, n aggregators and p demand centers, each with known Latitude and Longitude. We assume a certain, fixed demand profile for a single product at the various demand centers and simulate the number of units assembled at each aggregator and fulfilled by each supplier, using random numbers, so that each simulation results in various paths from supplier to aggregator to demand center, and the sum of costs of all paths in that simulation will give the total cost. Minimum total cost across all simulations will give the optimal sourcing and assembly strategy. With the use of Latitude and Longitude, we model the transportation costs as a function of distance. In addition, truck size is also used in transportation cost calculation. Using fixed and variable cost for each assembly unit, we model the total cost for each assembly unit for the units assembled there. Inbound and Outbound transportation cost from supplier to aggregator and from aggregator to demand center is also computed using distance and truck sizes.