ENSA /5GM /2024-2025

REPORT
Exercises in Supply Chain Optimization and Simulation
using anyLogistix
Level 2 Advanced.

Realised by :

OUTTIB Abdelhadi

Speciality : Mechanical Engineering.

Supervised by :
M. EL KORCHI.
 INTRODUCTION
Supply chain network design and operational planning decisions can have
a drastic impact on the profitability and success of a company. Whether to have
one warehouse or two, close a factory or rent a new one, or to choose one
network path over another are all consequential decisions a supply chain (SC)
manager must make. However, these decisions must be the result of more than
experience or intuition, and, as a result, research in SC management (SCM) is
geared towards providing the data, tools, and models necessary for supporting
SC managers’ decisions. One of these decision-supporting tools is anyLogistix,
a software which facilitates Greenfield Analysis, Network Optimization, and
Simulation.

Using the models available in anyLogistix, we will conduct analyses to

(1) determine an optimal location using Greenfield Analysis (GFA) for a new
warehouse, given the location of their cur rent customers and those customers
relative demands, (2) compare alternative network designs using Network
Optimization (NO), (3) perform a Simulation of different scenarios, (4) validate
3 the models using Validation, Comparison experiments, and (5) analyze SC
behavior under un certainty using the Risk Analysis experiment.

This case study seeks to convey the following skills: Analytical Skills:
Students will possess the analytical and critical thinking skills to evaluate issues
faced in business and professional careers. Technical Skills: Students will
possess the necessary technological skills to analyze problems, develop
solutions, and convey information using optimization and simulation software.

P a g e 2 | 36
Case study 1
I. Greenfield Analysis (GFA)
 Creating an ALX model

Step 1. Open scenario PB GFA Advanced.

Step 2. Enter data from Table 1 into tables Customers, Demand, and Products.
The data in these tables should correspond to Table 1.

 Analyze the results

a) What are the optimal coordinates of the DC?

P a g e 3 | 36
 Optimales coordination of (DC) are :

 Latitude : 50.877
 Longitude : 7.9

b) What is the maximum distance from the optimal DC location to a

customer?

The maximum distance from the optimal DC location to a customer is the

distance between the DC and Bremen with 252.851 km.

c) What is the minimum distance from the optimal DC location to a

customer?
P a g e 4 | 36
 The minimum distance from the optimal DC location to a customer is the
distance between the DC and Cologne with 64.976 km.

d) What are the total costs of the SC?

The totla costs are 15,741,493.06 pcs*km.

e) Compare the data in statistics “Flows” and Table “Demand”. Do we

satisfy all customer demand from the optimal DC location?

P a g e 5 | 36
  Yes, we satisfy all customer demand from the optimal DC location
because we have damand and product flow are equals. 82,350 pcs.

 But If the total customer demand is indeed superior to 82,350 pcs, then
no. We should Relocate the DC.

f) What other costs were not considered in selecting the optimal facility
location in the GFA?

Costs not considered in the GFA analysis:

 Fixed installation costs

 Operational costs
 Inventory-related costs
 Environmental costs
 Unforeseen costs
 Costs related to suppliers or subcontractors
 Production Cost and others that we will see in the NO Analysis

The GFA analysis primarily focuses on transportation flows and distances but
excludes a comprehensive view of the fixed and operational costs required to
ensure the viability of the chosen location.

 Step 3. Go to GFA Experiment and run it for “Number of sites = 2”.

P a g e 6 | 36
  Analyze the results
a) What are the total costs of the SC?

The total costs of the SC is 6,702,282 pcs*km.

b) Compare the results with one and two DCs in terms of costs and
responsiveness.

Total Costs:
* With 1 DC, the costs were 15,741,493.06 pcs * km.
** With 2 DCs, the costs decreased to 6,702,282 pcs * km, a significant
reduction of 57.419%.
*** Adding a second DC brought distribution centers closer to customers,
reducing distances and transportation costs from 2,680,403 km to 1,680,852km
with a reduction of 37.291%.

Responsiveness:
* With 1 DC, customers are served from a single point, potentially increasing
delays for those far from the single DC.
** With 2 DCs, distances to serve customers are reduced, improving
responsiveness and delivery times.

Remark

Adding a second DC not only significantly reduces transportation costs but also
enhances responsiveness by bringing distribution centers closer to customers.
However, this improvement must be weighed against the additional fixed costs
associated with establishing and operating the second DC.

P a g e 7 | 36
 II. Network Optimization (NO)

The production facility has now been established in Nuremberg and 250 bikes
are produced each day.

OPTIONS :

 Option 1: DC in Germany and Factory in Germany

 Option 2: DC in Germany and Factory in Poland
 Option 3: DC in Czech Republic and Factory in Poland
 Option 4: DC in Czech Republic and Factory in Germany

 Step 1. Open scenario PB NO Advanced.

 Step 2. Enter data from Table 2 and Fig. 1

 Analyze the results

a) What is the most profitable SC design?

P a g e 8 | 36
 The optimization results show that the highest profit can be achieved in
the SC design with a DC in Czech Republic and a factory in Poland.

b) Is demand for all customers satisfied ?

 We have the maximum demand is 89,670 pcs.

 We have the flow production of the factory is 89,670 pcs.

 We have the storage in flow of the DC is 89,670 pcs.

 The trajectories also link all customers with the DC.
 So we satisfied the demande of customers in this SC optimization.

P a g e 9 | 36
 c) What is the total revenue of the most profitable SC?
d) What is total profit of the most profitable SC?

e) Compare the data in statistics “Production Flows” and Table “Demand”.

Does the production quantity correspond to the total demand?

 Yes, that is clear in the previous tables of production flows ans Demand in
the question b)

f) Compare the optimal SC design as computed in the NO and the initial SC

design (factory and DC in Germany) in terms of profit.

 For the optimization of the SC in NO Analysis we have :

 In the initial SC design in GFA (factory and DC in Germany) Analysis we

have :

P a g e 10 | 36
  So the Profit of the SC in NO Analysis with 28,284526.402 USD is
superior to the profit of the SC in the GFA Analysis with 10,441,563,685
USD.

g) What other costs should be considered when redesigning the SC according

to NO results?

 We don’t consider the capacity constraint of the factory and also the
demand variability
 Periods have different production rate trough the year
 demand for many
 products is stochastic and subject to seasonal fluctuations in four periods,
i.e., winter, spring, summer, and fall.

h) What other factors, apart from costs, should be considered when re-
designing the SC according to the results of the NO?

 We should consider the cost of production of each product and the

production time of each product, also the Demand Min and Demand Max
of the each product.

P a g e 11 | 36
 CONSTRAINT

Constraint: the Polish factory would only consider annual quantities of each

bicycle type within the range of 10,000 units (minimum capacity

utilization) and 25,000 units (maximum capacity utilization).

 Step 1. Open scenario PB NO Advanced Constrained.

 Step 2. Enter capacity constraints data into table “Production” in the
columns “Min Throughput” and “Max Throughput”.

 Analyze the results

a) What is the most profitable SC design considering the capacity constraint of

the factory in Poland?

b) What is the total profit of the most profitable SC?

c) Compare the optimal SC design with the capacity constraint, as computed in

the second NO, and the optimal SC design without the capacity constraint, as
computed in the first NO experiment, in terms of profit.
P a g e 12 | 36
  For the optimal SC design with the capacity constraint we have the profit
as monsioned in the picture bellow is 9,207,806.551 USD and for the
optimal SC design without the capacity constraint we have the profit is
16,460,803.598 USD.
 So we can say that we can have more profit without capacity constraint

d) Which differences between solutions in incapacitated and capacitated

scenarios can be observed? Explain.

 when comparing incapacitated and capacitated scenarios, the following

differences can typically be observed:

1. Facility Utilization:
o Incapacitated scenario: Facilities may handle unlimited demand,
leading to unrealistically high usage of certain locations.
o Capacitated scenario: Facility limits are enforced, distributing
demand more evenly across locations.
2. Costs:
o Incapacitated scenario: Lower transportation costs due to optimal
routing without capacity constraints.
o Capacitated scenario: Higher transportation or operational costs
as demand may need to be served from secondary or distant
facilities.
3. Allocation Patterns:
o Incapacitated scenario: One or a few facilities dominate service
due to cost efficiency.
o Capacitated scenario: More facilities are utilized to comply with
capacity restrictions.
4. Service Levels:

P a g e 13 | 36
 o Incapacitated scenario: Higher service levels due to unconstrained
supply.
o Capacitated scenario: Potentially lower service levels if capacity
constraints lead to delays or unmet demand.

 These differences highlight the importance of considering capacity

constraints in realistic supply chain design and optimization.

 Step 1 : Modify your scenario PB NO Advanced or PB NO Advanced

constrained.
 Analyze the result.
P a g e 14 | 36
  the most profitable SC design

a) Explain the inventory allocation in table “Storage by Products”.

In the "Storage by Product" table:

1. Facilities and Products:

P a g e 15 | 36
 o The table shows inventory allocation for different facilities (e.g.,
DC Czech, DC Germany, and Factory Poland) and products (urban,
all-terrain, x-cross, and tour).
2. Inflow and Outflow:
o In Flow: Quantities received at each facility.
o Out Flow: Quantities distributed or shipped from each facility. For
instance, DC Czech distributes 3,185 pcs of "urban" products.
3. Initial Storage and Storage:
o No initial or remaining storage is reported for any product,
indicating all inflows are immediately distributed.
4. Carrying Costs:
o Carrying costs are zero for factories, and non null for DCs.
Carrying cost (or holding cost) refers to the total expenses incurred
to store and maintain inventory over a period.

b) Explain the values of Demand Min and Demand Max in table

“Demand”.

P a g e 16 | 36
  Demand Min: The minimum quantity of a product that is expected to be
demanded during the period. It acts as a baseline to ensure that inventory
levels do not fall below a certain threshold.
 Demand Max: The maximum quantity of a product that is expected to be
demanded during the period. This helps to plan for peak demand and
ensures sufficient stock is available to meet higher-than-expected needs.

Together, these values help in demand forecasting, inventory management, and

capacity planning.

c) Compare the scenario with only a single period and deterministic

demand and the new scenario according to each scenario’s financial
performance in table “Overall Stats”.

 For the scenario with only a single period we have :

 For the scenario with four periods we have :

P a g e 17 | 36
  Advantages : In the second secanio we optimize the production cost and
decreasing it
We increase the revenue also
And increasing the objectif

 Disadvantages : But we increase the transportation cost ans the inbound

and outbound processing cost

III. Simulation: Dynamic analysis

In simulation, we extend our analysis by adding the following features: - - - -

 We transit from flows (as in NO) to orders, i.e., the customer demand is
no longer considered an aggregated flow during a period, but it is now
generated as orders at certain intervals, e.g., 10 bicycles every day.
 We introduce inventory control to manage ordering processes.
 We introduce sourcing policies (e.g., single vs. multiple sourcing) to
manage replenishment processes.
 We introduce shipment control (LTL/FTL) to manage shipment
processes.

a) What are the profit, revenue, and costs of the SC?

P a g e 18 | 36
 the most profitable SC design

b) Is demand for all customers satisfied? Explain.

 No all customers are not satisfied because only the service level by
product is 100% but other service levels are not.

P a g e 19 | 36
 c) What is the production utilization of factories in Poland and Germany?
Explain why the German factory is utilized to 100% and the factory in
Poland is utilized only to 75% even if we clearly see insufficient
production quantities and the backlog?

 The 100% utilization of the German factory may prioritize regions or

products with higher profit margins or closer customer locations.
 The German factory is operating at full capacity, likely due to its
proximity to high-demand regions or its ability to produce specific
products required to meet demand. This ensures its resources are
maximally used.
 Additionally, supply chain constraints like limited raw materials,
transportation delays, or higher production costs in Poland could lead to
underutilization.

d) What is your judgment on the inventory dynamics in the SC?

P a g e 20 | 36
  The inventory dynamics in the SC refer to the veriation of demande in
periods and also the producton time of each product
 The second raison is the inventory policy of the DC.
 We have also the demand fullfilement

e) What is your judgment on the lead time?

Increasing lead time should be avoided unless absolutely necessary. If

unavoidable, mitigating strategies like better demand forecasting, supplier
collaboration, or process optimization should be implemented.

P a g e 21 | 36
 f) What suggestions for improvement do you have which could increase
profit and customer satisfaction?

To increase profit and customer satisfaction, the following improvements

can be suggested:

 Optimize Production Allocation: Ensure balanced utilization of

factories (e.g., better leveraging the Polish factory to reduce
backlog and meet demand).
 Reduce Lead Times: Streamline production and transportation
processes to deliver products faster.
 Enhance Inventory Management: Maintain optimal safety stock
levels to prevent stockouts while minimizing carrying costs.
 Invest in Supplier Collaboration: Strengthen relationships with
suppliers to ensure a steady flow of raw materials and reduce
delays.
 Implement Demand Forecasting: Use advanced analytics to
predict customer demand more accurately and align production.

Step 1. Create a copy of your scenario PB SIM Advanced and modify it

according to Table 4 and name it PB SIM Advanced_Improved.

Step 2. Change data from Table 4.

a) What are the profit, revenue, and costs of the SC? Did we improve?

P a g e 22 | 36
 b) Is demand for all customers satisfied? Explain.

 No all customers are not satisfied because only the service level by
product is 100% but other service levels are not but in this sim the
satisfaction is way better than the previous one.

P a g e 23 | 36
 c) What is the production utilization of factories in Poland and
Germany? Explain.

The 100% utilization of the German factory may prioritize regions or

products with higher profit margins or closer customer locations

d) What is your judgment on the inventory dynamics in the SC?

e) Explain how MIN (reorder point) and MAX (target inventory)

values have been computed.

MIN (reorder
point)

MAX (target
inventory)

P a g e 24 | 36
 f) What is your judgment on the lead time?
 Increasing lead time should be avoided unless absolutely necessary. If
unavoidable, mitigating strategies like better demand forecasting, supplier
collaboration, or process optimization should be implemented.

a) Explain why the changes made improved SC performance.

 For the SIM Advanced

P a g e 25 | 36
  For the SIM Advanced improved

For the DC and the factory, three inventory policies have to be developed.
We assign the DC and factories a “min-max policy” for all products, where the
minimum stock is 50, the maxi mum stock is 100, and the initial stock is 50
bicycles.

Implementing a min-max inventory policy (50-100 bicycles) at the DC and

factories enhances KPIs by balancing service levels, holding costs, and
inventory turnover. It ensures prompt demand fulfillment, reducing stockouts
and backorders, while minimizing carrying costs from overstocking. This
approach improves supply chain responsiveness to demand fluctuations and
optimizes operational costs, boosting profitability and KPIs like fill rate, lead
time, and carrying costs.

b) How can you validate the simulation modelling results using the
previous network optimization experiments?

P a g e 26 | 36
  To validate simulation modeling results using previous network
optimization experiments

 Compare Key Metrics by matching outputs like total costs, service levels,
and inventory levels from simulation results with the optimized results
from network experiments.
IV. Risk analysis
Step 1. Create a copy of your scenario PB SIM Advanced_Improved and
rename PB SIM Advanced_Improved_Risk.

Step 2. Use table “Event” to setup a breakdown of the DC for two months
starting July 1.

 Analyze the results

a) How does a disruption of the DC impact the KPIs?

 Before the setup of the breakdown of the DC :

P a g e 27 | 36
 After setup a breakdown of the DC for two months starting July 1 :

*** The breakdown has decreased all KPIs of profit and revenue and
production and aslo decrease the demand in a remarkable way during the
breakdown so the KPI of the Lead Time has increased by the way and the
inventory that is not delivred is also increased like we see in the graphs
bellow.

b) How would you suggest managing disruption risks in the SC?

 Managing disruption risks in the supply chain requires a proactive and

comprehensive approach. Diversifying suppliers across different regions
reduces dependency on a single source and mitigates risks from localized
disruptions. Maintaining safety stock for critical products provides a
buffer to handle sudden demand spikes or supply shortages.

 This strategie create a more robust supply chain capable of withstanding

disruptions effectively.

P a g e 28 | 36
 V. Comparison experiment
Step 1. Open scenario PB SIM Advanced and go to Comparison Experiment.

Step 2. Select scenarios PB SIM Advanced _Improved, PB SIM Advanced _Im

proved_Risk, and PB SIM Advanced to compare.

Step 3. Create KPI dashboard.

 Performing experiments
a) What are the profit, ELT service level, Service level, and order backlog
for the two scenarios? Did we improve in the Improved scenario?

P a g e 29 | 36
P a g e 30 | 36
 CONCLUSION

*** We can say that PB SIM Advanced Improved is the best supply chain as it
represents maximum profits and a generally higher service level compared to
the other two, as clearly shown in the graphs. Therefore, it represents the most
optimal supply chain.

b) How can you explain the relationship between the Simulation and
Comparison experiments?

The Simulation and Comparison experiments are closely related and

complement each other. The Simulation experiment is used to model the
behavior of the supply chain under specific conditions, taking into account
dynamic factors such as demand variability, transportation delays, and inventory
levels. It provides detailed outputs, such as costs, lead times, and service levels.

The Comparison experiment, on the other hand, is designed to evaluate and

compare multiple scenarios or configurations created through simulations. It
allows users to analyze key performance indicators (KPIs) side by side, helping
to identify the most efficient and cost-effective supply chain setup.

P a g e 31 | 36
 VI. Validation using Variation

Step 1. Open scenario PB SIM Advanced_Improved and go to Variation

Experiment.

Step 2. Select the parameter we will vary (Inventory – Min).

Step 3. Create KPI dashboard.

 Analyze the results

a) What is the profit, ELT service level, and order backlog for different
demands?

P a g e 32 | 36
P a g e 33 | 36
b) Why and how do the KPIs change as demand changes?

During a variation experiment, KPIs (Key Performance Indicators) change

as demand fluctuates because KPIs are closely tied to the system's response
to demand levels. As demand increases or decreases, various factors such as
inventory levels, transportation costs, lead times, and resource utilization are
impacted, which in turn affects KPIs.

The variation experiment in AnyLogistix simulates different scenarios of

demand, and the KPIs will change depending on how the supply chain adapts
to the new demand conditions. These changes provide insights into system
vulnerabilities and opportunities for improvement.

c) Is the simulation model sensitive?

o As shown in the graphs the curves of variation are almost
tangent
o So the model is not a lot sensitive.

VII. Recommendations

 Global Financial Analysis (GFA)

P a g e 34 | 36
 Recommendation: If the GFA results indicate high financial costs, focus
on improving cost efficiency in production, inventory management, and
transportation. Consider reducing costs through better supplier selection
or optimizing transportation routes.
 Impact on SC Design: A cost-efficient supply chain should be
prioritized, with an emphasis on reducing operational costs while
maintaining high service levels.

 Network Optimization (NO)

 Recommendation: Based on NO, optimize the network of suppliers,

warehouses, and distribution centers. Consider centralizing or
decentralizing warehousing depending on demand variability and
transportation costs.
 Impact on SC Design: Use the network insights to design a distribution
system that balances proximity to customers with transportation cost
minimization. For example, placing warehouses closer to high-demand
regions might reduce delivery time and cost.
 Simulation (SIM)

 Recommendation: The SIM results can offer insights into the impact of
different supply chain configurations under varying conditions. If demand
fluctuations cause significant disruptions, consider introducing more
flexibility in the supply chain (e.g., flexible production lines or multi-
supplier sourcing).
 Impact on SC Design: A more flexible design would allow rapid
response to demand changes and other uncertainties.

P a g e 35 | 36
 CONCLUSION
In conclusion, the analysis conducted through the AnyLogistix platform
provides valuable insights into optimizing Polarbear Bicycle’s supply chain
design. By evaluating key performance indicators (KPIs) from the GFA, NO,
SIM, Comparison, and Variation experiments, we were able to identify areas
where cost reductions, improved service levels, and greater flexibility in
operations could be achieved. The results suggest that optimizing the network
design, incorporating flexible production capacities, and implementing demand-
driven inventory control strategies will be important in responding effectively to
varying demand conditions and minimizing costs. Additionally, addressing
factors such as supply chain risks, technology integration, and sustainability
considerations will contribute to long-term resilience and competitiveness. By
aligning the supply chain with these insights, Polarbear Bicycle can enhance its
operational efficiency and position itself to better meet customer demands while
maintaining financial sustainability.

P a g e 36 | 36