chapter  4
14 Pages

Simulation-Based Inventory Control in a Chemical Industry

In practice, several unexpected factors such as machine failures, human errors, or natural conditions such as weather may cause costly interruptions in production systems. In chemical industries in addition to the aforementioned factors, it is often the case that interruptions occur due to lack of necessary raw materials required for the ongoing production. Although the required raw materials and their amounts are defined in pick lists based on the production type, there are several types of chemicals such as adjust materials and fillers, of which usage and/or amount may not be estimated correctly in advance in those pick lists due to their chemical properties. Hence, lack of these raw materials causes interruptions in the production process and may require long waiting times for their supplements to be replenished from the main warehouse. Because these interruptions and the resulting delays are costly, chemical industries tend to carry these materials as floor stock items (FSIs) at the periphery of the production area to use them when and if required. Therefore, it is significant to determine which materials and in what quantities to carry in the socalled floor stock storage areas (FSSAs) to decrease if not eliminate

4.1 Introduction 67 4.2 Literature Review 68 4.3 Problem Description and Simulation Modeling 70 4.4 Discussion of Results 76 4.5 Conclusions 76 References 78

the number of interruptions. In this chapter, a floor stock problem is solved as an (s, S) inventory model using simulation optimization.