In the following, we will analyze the functioning of an economic entity. This was done in NetLogo. The following data is known:
Delivery lot: The supplier delivers 150 pieces of goods in one delivery.
Delivery interval: The supplier delivers every 30 days.
Deficit penalty: If there is a shortage (insufficient goods to meet demand), a penalty of 20% of the unit price of the goods is paid for each missing unit for one year.
Number of consumers: There are 50 consumers.
Delivery costs: The cost of delivering the goods is EUR 20 per delivery.
Interest rate: The annual interest rate on the loans taken out is 10%.
Goods price: The unit price of the goods is EUR 28.
Mean lot: On average, each consumer buys 3 units of goods.
Arrival time: On average, each consumer visits the shop every 80 days.
Following this model for one year (365 ticks) resulted in an average annual cost of €450,31.
Our challenge is to explore another strategy. We think that if we increase the delivery lot size to 200 pieces and reduce the delivery interval, i.e., the supplier will only deliver every 60 days, we can reduce the average annual cost. So the changed data is the following:
Delivery lot: The supplier delivers 200 pieces of goods in one delivery.
Delivery interval: The supplier delivers every 60 days.
Deficit penalty: If there is a shortage (insufficient goods to meet demand), a penalty of 20% of the unit price of the goods is paid for each missing unit for one year.
Number of consumers: There are 50 consumers.
Delivery costs: The cost of delivering the goods is EUR 20 per delivery.
Interest rate: The annual interest rate on the loans taken out is 10%.
Goods price: The unit price of the goods is EUR 28.
Mean lot: On average, each consumer buys 3 units of goods.
Arrival time: On average, each consumer visits the shop every 80 days.
Following our new model for one year (365 ticks) resulted in an average annual cost of €289,79.
Results
In comparing two scenarios for an economic entity's supply chain management, we observe distinct strategies aimed at optimizing costs and logistics. In the original case, the supplier delivered 150 pieces of goods every 30 days, resulting in an average annual cost of €450.31. Conversely, in the revised case, the delivery lot size was increased to 200 pieces, with deliveries occurring every 60 days. This adjustment led to a notable reduction in the average annual cost to €289.79.
The increase in delivery lot size in the revised case suggests a strategic move towards economies of scale. With larger delivery lots, the supplier potentially benefits from reduced unit costs for transportation and logistics, contributing to overall cost savings. Additionally, by extending the delivery interval to every 60 days, the revised strategy reduces the frequency of deliveries.
Both scenarios maintain consistent parameters such as delivery costs (€20 per delivery), interest rates (10% annually), and goods prices (€28 per unit). However, the impact of the deficit penalty remains consistent, with both cases incurring a penalty of 20% of the unit price for each missing unit for one year. Nevertheless, the larger delivery lot size in the revised case may mitigate the frequency of shortages, potentially reducing overall penalty costs.
Conclusion
The revised strategy demonstrates success in optimizing costs and logistics, leveraging economies of scale, and adjusting delivery intervals. However, further analysis could delve into factors such as consumer satisfaction and potential risks associated with managing larger inventories to ensure a comprehensive understanding of the overall impact.