A Case Study for Simulation and Optimization Based Planning of Production and Logistics Systems

This paper introduces a practical approach for the comprehensive simulation based planning and optimization of the production and logistics of a discrete goods manufacturer. Although simulation and optimization are well-established planning aides in production and logistics, their actual application in the field is still scarce, especially in small and medium-sized enterprises (SMEs). This is largely due to the complexity of the planning task and lack of practically applicable approaches for real-life planning scenarios. This paper provides a case study from the food industry, featuring a comprehensive planning approach based on simulation and optimization. The approach utilizes an offline-coupled multilevel simulation to smooth production and logistics planning via optimization, to optimally configure the production system using discrete-event simulation and to optimize the logistics network utilizing an agent-based simulation. The connected simulation and optimization modules can enhance the production logistics significantly, potentially providing a reference approach for similar industry applications.

Simulation is a well-established planning aide for planning purposes in production environments (Michaloski et al. 2011), both for production planning and control (Kádár et al. 2004; Mula et al. 2006) and for optimizing factory processes (Kuhn 2006; Stahl et al. 2013). Despite the availability and acknowledged potential, the practical application is still scarce, as both a literature review (Jahangirian et al. 2010) and practical experience in the field of planning projects in the manufacturing industry show. A major hurdle is the perceived difficulty of designing models and acquiring proper data as well as the scarcity of reference applications with significant shown benefits. This paper is aimed at contributing to the understanding of potential benefits of simulation applications for practical planning purposes, especially for small and medium sized companies (SME), that find it particularly hard to cope with complex planning situations and the application of advanced planning techniques. The paper is based on a complex planning case for a food manufacturer in Europe, in which a multi-module simulation based planning method was developed and applied. The cased study results are discussed.

The paper is structured as follows: After an introduction of the case study and a general introduction of the planning approach, the three major modules of the approach are presented. The paper will finish with a summary discussion of the results and an outlook on future research.

Case Study Introduction and Approach Overview

The case study is based on a food manufacturer in Europe that produces goods for supermarket chains and wholesale, also located in Europe. The planning task that is meant to be aided by the simulation based approach presented herein, is the factory planning of a new factory with updated production technology and processes as well as a significantly increased production capacity to support the expected growth in the company’s business. The goals for the planning mainly consist of calculating the necessary amount and capacity of production and logistics resources, while at the same time improving the productivity of the system, which in turn minimizes the investment and operational cost for the new plant. Figure 1 offers a simplified overview of the main production process.

Process overview of the production facility

Figure 1: Simplified process overview of the production facility of the case study.

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