Discrete system simulation application on determining the optimal amount of weekly production

Abstract

PT. MNO produces egg trays to serve requests from 4 Distribution Centers (DC) in 4 regions, namely DC1, DC2, DC3, and DC4. Delivery of products to meet all DC requests is done once a week. Sometimes, supply shortages occur when the total weekly production and initial stock is lower than the total demand. This shortage of supply results in loss of opportunity. While in other weeks there is excess inventory which causes storage costs. Shortage or excess stock is related to the absence of production planning and determination of weekly production plans. Therefore, the optimal amount of weekly production needs to be determined using a system simulation. Simulation models are designed and translated into formulas in Microsoft Excel worksheets. While data on the number of requests is generated by using the weekly demand distribution pattern as a reference. Discrete system simulations are run by experimenting on nine levels of total weekly production. The output obtained includes the number of requests that can be fulfilled, the weekly ending stock, the number of shortage, the amount of excess stock, and the total profit. Simulation results obtained can indicate the optimal level of production.