A system dynamics simulation modeling for managing the inventory in multi-echelon multi-product pharmaceutical supply chain

Abstract

This paper presents a System Dynamics simulation inventory management modeling for a multi-echelon multi-product pharmaceutical supply chain (PSC). The (R, s, S) inventory control method is adopted for all PSC entities while considering stochastic products' demand. The model aims to support the PSC entities managers selecting their operational service levels in light of the total inventory cost. Two models are proposed; the first consists of a distributor, a health care facility, and a manufacturer; while the second model introduces more complicated scenario with local and regional distributors, two healthcare facilities, and a manufacturer. The models implementation established its ability to illustrate the trade-off between the inventory cost and the service level.