Cellular manufacturing design and replenishment strategy in a capacitated supply chain system: A simulation-based analysis

This paper studies the integration of design and control phases in a three-echelon supply chain system of a blood sugar strip manufacturer. The first step is manufacturing system design based on layered Cellular Manufacturing System (CMS) for which a mixed-integer linear programming approach is proposed in order to minimize the required number of cells. The novelty of the proposed model is in incorporating shifts into layered CMS design. In the second step of the design phase inventory parameters in different levels of the supply chain are estimated based on the continuous review, fixed order quantity (Q,r) model. Control phase is triggered by releasing customer order for multiple types of products and includes replenishments in the three echelons of the supply chain and scheduling in the layered CMS. In order to evaluate the system cost, the capacitated supply chain system is simulated in Simio software package. In the first phase of the simulation, cost components are obtained based on the inventory parameters estimated in the design phase. Next, simulation based on OptQuest feature is performed to improve total cost and estimate the inventory parameters and expected cell utilization. Comparing system cost and the parameters from the design phase to the results of the OptQuest approach evaluates the manufacturing system design and the replenishment policy proposed in the design phase. Sensitivity analysis is performed to analyze the effect of shortage penalty and inventory carrying rate on the total cost of the system. Finally, statistical analysis result indicate Re-Order Point (ROP) values obtained by the OptQuest have significantly changed compared with ROP values estimated in the design phase; however, the same conclusion is not applicable for order quantity values.