Phase 1. Create and Define Inventory and Sourcing
We shall start with obtaining the data that
will serve as the basis for our experiment. Since Simulation
experiment requires optimized data to simulate the delivery
process and exclude every possible supply chain drawback, you
may either provide your own optimized data or you can instantly import
the scenario containing the Network Optimization
experiment results. Either way, you should have a supply
chain model containing
the following parameters:
- Demand per product
- Distribution centers
located in optimal
- Site opening costs
The aim of the Simulation experiment
is to model the actual
products delivery on the GIS map with detailed statistics generated
real-time. It is used as well for what-if scenarios to see how
the changes you make affect the outcome.
After receiving the first simulation results,
you can run the simulation experiment
to test different
what-if scenarios in search for the best balance between the inventory
volume and service level quality.
In this phase we will create
define sourcing and inventory policies.
- The sourcing policy is used to define the products to be
shipped, their source(s) and destination(s).
inventory policy is used to optimize the amount of products to be kept
at a particular DC. It must be the least possible
amount covering all the incoming orders.
If you choose to work with the scenario containing NO results, the
Sourcing and Inventory tables will already contain all the required
records, as a result, you will only have to modify them. This
tutorial is based on the imported scenario with data derived from the
NO experiment results.
Prior to creating the policies, we will create two
groups, which will contain distribution centers and suppliers.
This step will simplify the
inventory and sourcing policies as we will define them for the whole
group, rather than for each distribution center
Let us start with creating a group for distribution centers.
Create a group of DCs
- Navigate to the Groups
table. You will see that it already contains a number of groups.
from the names of the groups we can see that part of them was created
as the result of the GFA experiment and the other part was created by
us while completing the Network Optimization tutorial.
above the table to create a new group. A new table record named Group 1 will be created.
- Click the Group 1 cell and
type in DCs to
specify the name of the group.
We have created and renamed a new group. Now we need
the content of the group. We know that this group will contain
distribution centers. The DCs we need can be defined in the Sites column of this table.
Define DCs for the group
- Double-click the DCs
row cell in the Sites
column. A dialog box will open containing all the available DCs to
Now we can move on to define sourcing and inventory policies.
- Click the toggle buttons in the Included
column referring to the Hazleton DC,
Vicksburg DC and Elko DC.
Click OK to
close the dialog box and apply the changes.
First, we will define
sourcing policy to organize the product shipping process
source to the delivery destinations.
a sourcing policy
After creating the new
we need to define its parameters by specifying the product we will be
shipping and its source. We will leave the set by
destination as it, since it already includes all the scenario's
to the Sourcing table. It already
contains a lot of policies, which were created
automatically based on the Product Flows table
records (those records were expanded on converting the NO scenario
type to Sim scenario type). The Sources
column contains DCs which will be servicing customers that are defined
in the Delivery Destination
groups. The content of the groups can be seen in the Groups
table. In other words, the sourcing policy is already
created and defined for customers and DCs.
We will now substitute the existing customer policies with
1 record. In such a way we will end up having just two policies: one
for DCs and one for customers.
Click Add to create a new policy. New
table record will be created.
The next step is to specify
the sourcing policy in the Type
column, or in
the origin of the product. Our
purchase from the closest fixed source. As you can see, this type is
selected by default. Move on to specifying the source of the product.
in the two
last Product column
cells by Ctrl+clicking them and press Spacebar to open the dialog box.
in the drop-down list and click OK to close the
Let us make the Port of LA service only the sites
contained in the DCs group, rather than all sites of the current
- Double-click the cell in the Sources
column and double-click DCs
to select it from the drop-down
list of available sources. The content of the cell will change.
close the drop-down list, click any empty spot beside
- Double-click the (All sites)
cell in the Delivery Destination
column and select DCs. In
such a way we create a clear product flow: from Port of LA to DCs, from
DCs to All customers.
- With the final step we will set the inclusion type for all
the initially offered policies to Exclude
since we no longer need to consider them.
- Navigate to the Inclusion
Type column, select all rows by Ctrl+clicking the
- Scroll down and deselect the rows # 27, 28 by
Ctrl+clicking them, since these are the two sourcing policies that
we will be using.
- Press spacebar to open a dialog box, click Include to
open a drop-down list of available inclusion types and select Exclude.
- Click OK to
close the dialog box.
We have finally set up the
parameters of the sourcing policy. Let's see the
connections between the suppliers and the distribution centers.
- Click the Show
icon in the GIS
map toolbar. It
might take a while, since
downloading the routes online.
Zoom into the Port of LA
supplier on the left. As you can see there are three routes to the
Now, let us define
the inventory policies for our supply chain facilities.
- Navigate to the
already contains policies, which were created within the previous
tutorials. We will not be using them since
we have created DCs group
that contains all the warehouses we need.
the horizontal scrolling bar at the bottom of the table to the right to
reach the end of the table. You will see that the inclusion type for
the policies is set to Include.
Since we will define a new policy containing a group of
DCs, all other policies must be excluded.
- Click the first cell in the Inclusion
Type column to select the policy, then Shift+click the
last cell in this column to select all the policies.
- Press Spacebar to open a dialog box.
- Set the policy type to Exclude
and click OK. All the
previously created policies will be now excluded from the
supply chain optimization.
you have marked the
policies as “Excluded”, the table records will turn gray.
- Now click the Add button above the table. New
policy will be created.
Now we need to specify the parameters of the
inventory policy parameters
- Double-click the
(All sites) cell in the Facility column and select DCs from the drop-down list of
the cell in the Product
column and select PS4
from the drop-down list of available products.
centers will purchase Sony consoles
using a min-max
inventory policy, which allows products to
be ordered when the inventory level falls below a
- Double-click the Unlimited inventory cell in the Policy type column and select the Min-max policy from the drop-down
list of available policies.
the Policy parameters
cell. A dialog box will open, prompting you to specify the Min and Max
- The Min
value represents a stock
that triggers the
- The Max value
represents the targeted stock level.
the Min value to 300,
then set the Max value to 3000.
need to define the initial stock, or the number of consoles that we have at
the beginning of the simulation.
table should look like this:
- Click the cell in the Initial stock, pieces column and
type in 1000. This will correspond to 1000
product items (PS4
That is it. We have defined the sourcing and inventory policies. Phase
1 of this
tutorial is completed. It was the last step on our way to setting up
the link below to proceed to Phase 2.
Tutorial | Phase 2. Configure and run
the Simulation experiment