MGMT2017 08

MGMT2017-Dynamic Simulation
1
Simulation
• Simulation is imitating the behaviour of one system with another. By making changes to the simulated supply
chain, one expects to gain understanding of the dynamics of the physical supply chain.
• Rather than deriving a mathematical analytical solution to the problem, experimentation with the model is done by
changing the parameters of the system in the computer, and study the differences in the outcome of the
experiments.
• Simulation is an ideal tool for further analysing the performance of a proposed design derived from an
optimization model.
Approaches:
 discrete-event simulation
 system dynamics
 agent-based simulation
 Monte Carlo( This is static approach)
× ×
2
Why Dynamic Simulation?
“Simulation is especially useful, when the underlying system is
assumed to be too complex to be examined by mathematical‐
analytical methods. Such complexity arises due to time‐
dependent, random, and interacting effects within the system”
Observation of Time Dynamic Interactions

Ability to observe how your Incorporate and gain visibility into dynamic
supply chain will perform over interactions between supply chain elements
time
Real World Variability Actual Behavior

Integrate randomness into various Determine and gain insight into
supply chain inputs and processes the real behavior of your supply
chain
© The AnyLogic Company | 3

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Analytical vs. Dynamic Simulation Models
Analytical Models Dynamic Simulation Models
• Simplifications and aggregation • Incorporate the logic & rules of

are required to describe the Modeling how the supply chain operates
model as a set of equations in reality
• Optimized based on the values • The behavior of the supply

the model was designed to Output chain system over time based
capture (i.e. cost) upon the logic & rules modeled
• Optimization means “solving”

the model. Considering all • The optimizer is an external
dependencies & constraints entity to the simulation model.
the optimizer reaches the Optimization Simulation outputs are fed
optimal objective (i.e. lowest iteratively as inputs to the
cost) optimization model

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What is Dynamic Simulation Modeling
• A Simulation model is described as a set of LOGICAL

RULES:
Customer places Initial inventory is 3000. If supplier workers
If factory has enough orders
orders for 300 units If inventory is below 2000 are on strike it will
for 3000 units then production
per day 4 days a week the DC orders a batch not process the
is started
of 3000 units If raw materials stock drops orders
below 100m3 order 300m3
• Simulation is the process of executing the LOGICAL RULES over

time order for order for order for order for Stock < 2000 Starts Stock < 100m3
Strike, do not
process the order
300 units 300 units 300 units 300 units order 3000 production order 300m 3
Modeling
Day 6 Day 7 Day 8 time
Day 1 Day 2 Day 3 Day 4 Day 5
• The output ofa simulation is the behavior of a system over

time
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Problems to Address with Simulation
• What safety stock should you have at each echelon in a supply
chain?( is not enabled in PLE version)
• Which inventory policy will meet customer service level
expectations?
• Where are the bottlenecks?
• What is the tradeoff between service level and cost?

• How robust is the supply chain design?
• How will a new manufacturing process impact the supply chain?
• What if we introduce new transportation policy?
• How will real world stochastics effect supply chain cost?
• …
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anyLogistix Simulation Modeling Capabilities
Warehouses Suppliers
Factory
Customers
AnyLogic
Factory
Distribution Centers

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Factory
Customers
AnyLogic

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Customers
• Generate orders and receive

shipments shipments
Supply
Chain
orders
• Customers’ behavior is defined in the Demand and the Products

tables
• Customer-related statistics include a number of characteristics e.g. service level, waiting time,
number of received orders, number of delayed orders
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Factory
Customers
AnyLogic

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Warehouse and Distribution Centers
• Receive customer orders, send shipments, generate upstream orders and receive
shipments shipments
shipments
Supply
Chain
orders orders
• DC parameters are defined in the DCs and Factories

table
• Collected statistics include inventory levels, costs, inbound shipments, outbound

shipments, incoming orders, outcoming orders, gates, utilization, etc.

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Factory
Inventory Policies
Sourcing Policies
Customers
Inventory Policies
Sourcing Policies Inventory Policies
Sourcing Policies
AnyLogic

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Inventory and Sourcing Policies
Distribution center/Warehouse/Factory
Reordering point Inventory policy defines

when and how many
products to order.
Use the Inventory table

Quantity to order to specify inventory
policies.
Sourcing policy defines

where to order.
Where to order
Use Sourcing table
to specify sourcing
policies.

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Factory
Inventory Policies
Sourcing Policies
Customers
Inventory Policies
Sourcing Policies
AnyLogic

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Factory (1)
Factory suppliers Factory Next SC level
Bill of Materials
BOM
Finished goods
stock
Production policies Table:
Table: BOM Inventory
Table: Production
Raw material stock
Table: Inventory
Table: Sourcing

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Factory (2)
• ALX assumes there is a production line for each product
• Each line may use the same pool of raw materials
• Production orders are created based on the Inventory policies for the
finished goods warehouse.
̶ They are not directly dependent on the orders the factory receives!
Production: Product 1 Product 1
Production: Product 2 Product 2

. .
. .
Production: Product N Product
N
Raw materials Finished goods

warehouse warehouse

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Factory (3)
• Factories produce and ship finished goods, receive orders and raw materials
shipments, order raw materials
shipments shipments shipments Supply
orders Chain
orders orders
• Factory behavior is defined in the following tables:

̶ DCs and Factories
̶ Production
̶ BOM
• Collected statistics include production cost, produced items, inventory levels,
production utilization, dropped orders, backlog etc.

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Factory
Inventory Policies
Sourcing Policies
Customers
Inventory Policies
Sourcing Policies
AnyLogic

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External Supplier
• Receives orders and sends

shipments
shipments
shipments shipments orders
• We cannot orders
control suppliers sourcing, inventory and transportation
policies orders
• Suppliers’ parameters are defined in the Suppliers table

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Factory
Transportation
policies
Inventory Policies
Sourcing Policies
Transportation
Transportation policies
Customers policies
Inventory Policies
Sourcing Policies
Transp AnyLogic
policies
ortatio
Distribution Centers n

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Transportation Policies
• Are used to define how transportation is organized
• The standard policies include:
̶ Private fleet – defined in the Fleets table
̶ Transportation means – defined in the Vehicle Types table

̶ Paths and transportation costs – defined in the Paths table
̶ Path selection rules – defined in the Path Selection table( Is
not provided in PLE version)
• ALX collects statistics on fleet utilization, transport
utilization, transportation cost, and lead time

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4.2 Exercise: Problem Definition
• Description:
̶ We are going to start producing and selling foam concrete in Brazil
̶ Our supply chain includes:
̶ A Factory near Tatui city
̶ A distribution center located near Sao Paulo where our first three customers are located
̶ Suppliers:
̶ Raw material sand supplier in Itapetininga
̶ Cement supplier in Piracicaba
̶ Foam agent supplier in Ribeirao Preto
• Goal:
̶ Implement the supply chain in virtual
environment and analyze its characteristics
Hint: Please import the scenario file “SimpleSIM_DC_Factory.xlsx” and follow the steps in the
next slides in which some initial steps are done or simply import”
“SimpleSIM_DC_Factory_Completed.xslx” in which all the steps are done.

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4.2 Exercise: Problem Definition
Cutting
Foam concrete
Mixing
…
raw
materials
Curing of foam
concrete Autoclave

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4.2 Exercise: Action - Step 1
• Let us modify the set of project units that we will be using in this scenario. Since all
financial metrics will be gathered in Brazilian reals (R$), we will have to create a new
monetary unit.
1. Choose Menu > Manage units to open

the Manage units dialog box
2. Click Add New Unit 3. Name the new monetary unit R$
4. Click Add

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• We have created a new monetary unit. Now Let us add a conversion rule for it
1. Hover your mouse over the newly created unit

and click the Add conversion button
2. Define Amount to by 3. Click the arrow

clicking and typing 0.3 and select USD
4.Click Add to add the

defined conversion rule of
1 R$ = 0.3 USD
to the current project
5.Click the Add New Conversion to add reversed

conversion rule of 0.3 USD = 1 R$ to the current project

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• We have created a conversion rule for the new monetary unit. Now we will set the new
unit as the default monetary unit within the current project
̶ The default unit will be used by default in all the new scenarios of the current project
3. Click x to close
1. Switch to the Units tab of the dialog box
the Manage Units dialog box
2. Hover mouse over the R$

and click the Set Default button

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• Now create a new simulation scenario

1. Click the Simulation tab to open the list
of the Simulation type of scenarios. 2. Click Add and Select Create new
3. Name the scenario

Simple SIM
4. Click Create to create

a new scenario

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4.2 Exercise: Action ‐ Step 5
• Zoom into Sao Paolo in the south of Brazil
̶ In the following exercises of this training we will learn how to automatically place
an object into the required location, but for now we will do it manually

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• Add three customers to the south-west of Sao Paulo
1. Click Create Customer

in the map toolbar
2.Create three customers by

clicking the map to the west of Sao
Paulo
On adding a new element via the map, the table

of this element type will automatically open below
the map with the new element’s record selected

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• Add a warehouse to the north of Sao Paulo
1. Click Create Warehouse 2. Click the map to

in the map toolbar create a warehouse
3. Click the cell and rename

Site to DC

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• Observe connections and supply chain structure

̶ By default the paths and the sourcing policies are defined from all objects to all objects, which
allows us to instantly observe connections
1. Click Show connections button to 2. Click Show Structure

observe the connections on the map to open Structure view

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• Edit the product created by default
1. Click In use and open

the Products table
2. Double-click the cell and rename 3. Double-click the cell and set 4. Set the Cost to 0, as it
the product to Foam concrete 600 the Selling Price to 164 will be calculated automatically
based on our production settings

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• Let us set daily demand for the foam concrete. Set Customer, Customer 2, and
Customer 3 to order 50, 40, and 70 m3 respectively
1. Navigate to the
Demand table
2. Double-click the Parameters
cell of the Customer record
3. Set Order interval, days to 1
4. Set Quantity to 50
6.In the same way set demand
parameters for the other two customers:
- Customer 2: Order interval, days: 1
5. Click OK to close the dialog box Quantity: 40
- Customer 3: Order interval, days: 1
Quantity: 70

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• Navigate to the Paths table and set the transportation cost per volume per distance to
0.16
1.Double-click the Cost Calculation Parameters
cell to open the dialog box
2. Set Cost per unit to 0.16
3. Click Save

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• Add statistics to the dashboard to observe data during experiment run

1. Select Simulation experiment
2. On the dashboard
canvas click Add Chart
3. Filter statistics
by typing Profit
4. Select the Profit statistics
5. Click OK in the bottom right corner of the

dialog box to add the element to the dashboard

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• Run the experiment and observe statistics
1. Run the experiment
2. Observe statistics as it is gathered

during experiment execution

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Controlling the Experiment Run
• The toolbar control elements of the simulation experiment

allow you to control the speed of the experiment run:
̶ Speed slider - (active if the experiment is launched or paused) defines the number
of model time units (days) corresponding to one second of real-time
̶ x1 sets the execution speed to one model day per second
̶ x2 sets the execution speed to two model days per second, etc.
̶ max sets the execution speed to the maximum
̶ The maximum speed can be set when you need to simulate a model for an extended period of time and the model does not require
you to set correspondence between the model time and the real-time units
̶ x0 sets the execution speed to zero, which pauses the experiment
̶ To resume the experiment set the slider to a non-zero value and click Run
̶ Run fast - (active only if the experiment is not running) starts the experiment and
runs it at maximum speed without displaying the map
̶ Pause - (active if the experiment is running) pauses the experiment
̶ Stop – (active if the experiment is launched or paused) stops the experiment

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• Simulation results
̶ When simulation completes (or when it is stopped) all statistics collected during the experiment run are
saved to the project database and become available to observe on the dashboard
The new result will be available in

the Statistics item. You will be
automatically taken to it

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Statistics: Configuration
• The Configure statistics dashboard allows you to define the statistics to collect during
the simulation run
Click the Statistics Configuration control

to open the list of statistics that can be
collected during simulation run
Search for a specific statistics Define additional settings

using the search field for the statistics to collect
Enable/Disable gathering statistics

by clicking the toggle button
All statistics are divided

in groups by their type

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Statistics: Naming
• Statistics are collected
by:
̶ Products
̶ Orders
̶ Sites
• Naming rules:
Product Flow
Fulfillment Fulfillment Fulfillment Fulfillment Fulfillment Fulfillment

received shipped received shipped received shipped
Demand Demand Demand Demand Demand Demand

placed received placed received placed received
Information Flow

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Statistics: Dashboard (1)
• The Dashboard is used to visualize the collected statistics
This is the ALX dashboard where you may analyze

statistics during and after a simulation run.
Each page may contain multiples statistics.

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• Rearranging dashboard
elements
1. Drag chart title to move
it around the dashboard
Dotted line indicates the chart’s position

on the dashboard when you release handle
2. Drag the the handle to adjust

the size of the dashboard element

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• Adding and configuring dashboard elements
Click Add chart to open
the Add chart dialog box
Specify the chart name. Data visualization preview
Choose data visualization type
Use filter to find

statistics by name
Selected statistics
will be added to
the dashboard
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• Configuring additional settings of dashboard
elements Defines if the data is shown as daily value
or as aggregated value that is gathered
from the beginning of simulation
List of keys that statistics can Add filters. For example, you
be detailed and filtered by may want to look at maximum
capacity of a Factory
Defines if statistics show data in total or per item.

For example, you may want to look at maximum
capacity per each supply chain object

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• Detail by
̶ Defines the level at which statistics must be collected
̶ e.g. by supply chain object, product, replication
• Filter
̶ Allows you to display the statistics only for selected items
̶ E.g. If you add filter by Customer 1, ALX will show transportation costs for Customer 1 only
• Total/Per Item
̶ Defines if the statistics is displayed individually for every item or in total for all the
items

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Statistics: Dashboard Export
• Collected statistics can be exported into an MS Excel file

for further analysis
• Statistics data is exported for each dashboard page, so the
set of the retrieved data relies on how you define it in the
dashboard
• To export data right-click the dashboard tab and select one
of the options from the context menu
• There are two options:
̶ Export all data from this page — exports raw data to an MS Excel file. It is the source data
generated by the experiment that is later processed to fill the BMW, histogram charts. So, you
will get much more data to analyze if you select this option
̶ Export plotted data from this page — exports data to an MS Excel file with the user-defined
settings (as it is on the dashboard)

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Statistics: Visualization Methods
Table
Line
Bar chart
Histogram
Best-Mean-Worst

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Statistics: Visualization Methods
• Table ‐ presents the statistics data in tabular form (in rows and
columns)
• Chart ‐ presents the statistics data in graphical form
The following types of charts are available:

• Line chart ‐ presents the statistics data as a series of data points
plotted along the time axis
• Bar chart ‐ presents the statistics data as single values as of the
experiment’s current model date
• Histogram chart ‐ presents the probability distribution of the
statistics data
• Best‐Mean‐Worst Line ‐ filters the required statistics data to
present only the best, mean and worst values. Presents the
statistics data as a series of data points plotted along the time axis

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• Let’s add a factory to the supply chain. We will place it near Tatui city, which is located
to the west of Sao Paolo
1. Click to switch to
scenario input data
Note that the new Factory is placed

in the middle of an ocean
2. Open DCs and Factories

create a new record
3. Double-click the cell and 4. Click the arrow and change

rename Site to Factory the object type to Factory

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• Define location of the new factory
5. Observe the new location of the factory.

It will be placed in the center of Tatui city
1. Open Locations table 2. Double-click the empty City cell 3. Double-click the empty Country cell 4. Enable
of this record and type Tatui of this record and type Brazil Autofill Coordinates

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• Navigate to the Sourcing table and define DC as the source of the product for the
customers
1. Double-click the Sources cell, 2. Double-click the Product cell

check DC and uncheck All sites and select Foam concrete 600
• Now define the factory as the source of the product for the DC
3. Click Add to create 4. Double-click the 5. Double-click the cell, 6. Click the arrow and select
a new table record cell and select DC check Factory and Foam concrete 600
uncheck All sites

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• Open the Shipping table and add DC to the list of Destinations
1. Double-click the Destinations cell
2. Check DC in addition to (All customers)
• The default setup allows shipping from any site to any customer. By adding the DC
object to the list of Destinations we allow it to also receive shipments from the Factory
object
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• Observe connections on the map and supply chain structure

̶ We can see the connection of the new Factory object, which, as we know, connects it to the
DC
1. Click Show connections
2. Сlick to observe
supply chain structure

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• Navigate to the Inventory table and define inventory policy for our DC
̶ The inventory policy will define that the DC has the initial stock of 300 m3 of foam
concrete, and that it places replenishment orders for 400 m3 each time its inventory drops below
200 m3
1. Double-click the 2. Double-click the cell and 3. Double-click the cell, 5. Сlick the cell
cell and select DC select Foam concrete 600 select Min-max policy and type 300
4. Double-click to open policy parameters

and set Min to 200 and Max to 400

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• Now we will define inventory policy for our Factory
̶ The inventory policy will define that the Factory has unlimited inventory of foam
concrete
1. Click Add to create 2. Double-Click the cell 3. Double-click the cell and 4. Leave the defined by default
a new table record and select Factory select Foam concrete 600 Unlimited inventory policy

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• Create new statistics

tab
1. Select Simulation experiment
2. Click Add new tab

to create a new tab
3. Name the new page DC

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• Add the Available inventory in product units statistic to the DC page
1. Click Add Chart to open

the Add chart dialog box
3. Select Line as the 4. Enable Daily to show

data visualization type data as daily value
5. Double-click and select DC

2. Select Products and check to observe data on this object only
Check the Available Inventory
in Product Units statistics
6. Click OK to close the dialog box

and add statistics to the dashboard

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• Run the experiment and observe

statistics
1. Run the experiment
2. Observe statistics

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Activity
For example, run the “SIM Global Network Examination ” from SIM in the help menu
Check some of the input tables including “DC and Factories”, “Inventory”, “Paths”,
“Products”, “Shipping”, and “Sourcing”. Analyze the results using statistics “Profit
and Loss Statement” ”, “Service Level”, and “Lead time”, and answer the following
questions:
1- What are the SC’s profit, revenue, and costs?
2- Is demand for all customers satisfied?
3- What is the minimum, average, and maximum lead time?
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MGMT2017-Dynamic Simulation

Observation of Time Dynamic Interactions

Real World Variability Actual Behavior

© The AnyLogic Company | 3

• Simplifications and aggregation • Incorporate the logic & rules of

• Optimized based on the values • The behavior of the supply

• Optimization means “solving”

© The AnyLogic Company | 4

• A Simulation model is described as a set of LOGICAL

• Simulation is the process of executing the LOGICAL RULES over

• The output ofa simulation is the behavior of a system over

© The AnyLogic Company |

• What is the tradeoff between service level and cost?

© The AnyLogic Company | 7

© The AnyLogic Company | 8

• Generate orders and receive

• Customers’ behavior is defined in the Demand and the Products

© The AnyLogic Company | 10

• DC parameters are defined in the DCs and Factories

• Collected statistics include inventory levels, costs, inbound shipments, outbound

© The AnyLogic Company |

© The AnyLogic Company | 12

Reordering point Inventory policy defines

Use the Inventory table

Sourcing policy defines

© The AnyLogic Company |

© The AnyLogic Company | 14

Factory suppliers Factory Next SC level

© The AnyLogic Company |

Production: Product 1 Product 1

Production: Product 2 Product 2

Raw materials Finished goods

© The AnyLogic Company | 16

• Factory behavior is defined in the following tables:

© The AnyLogic Company |

© The AnyLogic Company | 18

• Receives orders and sends

shipments shipments orders

© The AnyLogic Company |

© The AnyLogic Company | 20

̶ Transportation means – defined in the Vehicle Types table

© The AnyLogic Company | 21

© The AnyLogic Company | 22

© The AnyLogic Company | 23

1. Choose Menu > Manage units to open

2. Click Add New Unit 3. Name the new monetary unit R$

© The AnyLogic Company |

1. Hover your mouse over the newly created unit

2. Define Amount to by 3. Click the arrow

4.Click Add to add the

5.Click the Add New Conversion to add reversed

© The AnyLogic Company |

2. Hover mouse over the R$

© The AnyLogic Company |

• Now create a new simulation scenario

3. Name the scenario

4. Click Create to create

© The AnyLogic Company |