Simulation based decision support system to determine production quantity for a low shelf life product

Abstract

In this paper we show how a Decision Support System (DSS) using simulation of a low shelf life pharmaceutical product's supply chain was created. The main technique that determines the production quantity is based on a simulation-based optimization approach. The system allows the planners to quickly see the impact of various strategies and changes in policies and take the best decision. The medicine is for a critical disease and hence the service level must be maintained upwards of 99.9%. To maintain this high service level, especially when the shelf life of the medicine is three weeks is a challenge for any supply chain. The tradeoff between service level and inventory scrapping cost (due to medicine expiry) is optimized using a simulation-based optimization approach.