A Micro Simulated and Demand Driven Supply Chain Model To Estimate Regional Production and Consumption Relations

Abstract

The various operations of production, distribution and consumption of goods make up supply chain networks. The usual pre requisite to model freight flows on between geographical zones, is an understanding of intra zonal production and consumption relations. This is in essence an aggregation of all individual firm to firm interactions taking place in form of production and consumption of goods, as well as transportation firms involved in the goods exchange process. In this paper, a demand driven micro-simulated supply chain model is presented. The presented model is a microsimulation model modeling the main firm types present in a traditional supply chain. It is a demand driven model using quantity of goods requested at the consumer side as a starting point. The different interacting firms use a modified Economic Order Quantity (EOQ) model as the basis of the simulation process. The cost function used includes also transportation and labor costs. The model simulates also shipping and carrying firms and takes into account raw material suppliers able to supply all or some subcomponents needed by production firms. Different initial conditions can be used to mimic real life firm to firm interactions. Firm level and zone level scenarios are simulated and results are shown.