System dynamics modelling for the chemical supply chain-A case study

The chemical supply chain constitutes all the activities from sourcing of raw materials to the delivery of goods to customers within, or across national boundaries. The study was conducted in ABC Ltd. company which manufactures chemicals like methanol and benzene. The firm was concerned about significant risks in SC like uncertain demands and orders. Thus, a system dynamics model was developed and simulated for the SC under changing demand levels, raw material shipment time, and cycle time. The results revealed that the increase in shipment time did not affect the sales, but, the RM inventory increased. Thus, it was advised to change the ordering pattern which minimises RM inventory. The results also revealed the existence of the bullwhip effect and identified an ideal cycle time which stabilises the system. An optimum requirement of transportation resources, labour and trucks, were determined. Furthermore, appropriate suggestions were made which may help in improving the SC performance.