![](bg4.png)
Considering this differences and a target error of
5%, results from simulation model is within
tolerances.
4.2 Improvement Case
The model was used to analyze some alternatives to
improve the distribution network, including:
Opening/Closing/Merging of RDC.
Reassignment of regions to RDC.
Adding delivery frequencies.
Using multiechelon inventories.
About twenty scenarios were simulated and the
model only required adding a small code to manage
the multiechelon inventory and the additional
delivery frequencies. A new distribution network
was found, composed by eight RDC, using
multiechelon inventories and serving twice-per week
to the metro areas, as shown in Figure 6:
Figure 6: Configuration of proposed distribution network
after simulation analysis.
Considering the actual distribution network as
100%, there are significant savings, as shown in
table 1:
Table 1: Comparison of key performance indicators of
base case versus proposed network.
The final savings of 19.3% of the total costs is
important for the company; this savings can be used
to reinforce the competitive position of the firm.
5 CONCLUSIONS
The proposed model, based on a two-echelon system
that can be replicated both forwards and backwards,
has been tested and used in a real situation to
improve a distribution network; its operation has
been fast, and helped to focus on the most important
characteristics of the model.
Finally, it is really critical to consider that any
simulation model, specially a strategic one, must be
designed to support a company to comply with its
strategy. This model must fit within the “reducing
cost” strategy to improve service to the bottom of
pyramid clients.
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Indicator Actual Proposed Savings
Inventory (pieces.) 100% 50.1% 49.9%
Transportation cost $$$ 100% 98.6% 1.4%
Total cost $$$ 100% 80.7% 19.3%
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