Simulation of a base stock inventory management system integrated with transportation strategies of a logistic network

A logistics network management system controlling the entire supply chain was designed to reduce the total cost and to achieve an efficient system. The interactions between inventory and transportation strategies in the logistics network are presented in this paper. Demand volumes and shipping sizes were simulated as part of a new conceptual model by using a discrete event simulation to minimize the total cost in the supply chain. The experiments indicate that the Full Truckload scenario leads to cost-efficiency and the larger demand size results in smaller cost per unit based on economies of scale. Considering the interaction effects, the demand size has a greater impact on the cost reduction than the shipping size.