Simulation study of inventory performance improvement in consumer products trade business unit using system dynamic approach

Abstract

This paper focused optimal inventory study on multi-product, multi-period, perishable products replenishment quantity in consumer product trade business unit (CPTBU) warehouse in Bahir Dar city. We proposed system dynamics method to improve optimal replenishment quantity of expired and stock-out products and saved the total operation cost such as loss of sale, expired cost, holding cost and ordering cost using vensim software. This study proposed 34.7% improved replenishment quantity of expired products, 32.2% replenishment quantity of stock-out products and totally this proposal saved 43,000US$ (1.2 million birr) of operational cost per year.