Analysis and cost versus reliability in a multi-echelon supply chain for a chemical plant

Abstract

The object of the thesis is to develop a simple approach or heuristic for managing various types of uncertainty within a chemical production/inventory system. Later the company can use it to minimize the total cost at any required Cycle Service Level (CSL) under variable demand and production reliability. To solve this problem, we will base historical data to estimate the distribution type, the average demand and the standard deviation for the production line and initially assume that some factors like holding cost, penalty cost, demand and lead-time affect the production/inventory policy. Then, based on the above data and assumptions we build a model in Excel and then simulate some cases where change variables input. The model then is verified by Geert-Jan van Houtum Methodology. Finally, we will carry out the outcome analysis to capture the essence or insights of the multi-echelon problem.