Simulation of Inventory Control System in a Supply Chain Using RFID

Abstract

This paper employs a simulation model in a Supply Chain Management (SCM) system. This study is one of the first to present simulation model of inventory control system in supply chain management using barcode and Radio Frequency Identification (RFID). The main objective of this model is to compare two inventory systems in a supply chain, one using RFID, versus the barcode. The model will help company to consider moving from a barcode system to the RFID application. A quantitative analysis based on a simulation model is developed. The model runs for both systems using ARENA simulation software with a comparison between the two systems. Furthermore, the simulation model is tested by applying three different types of demand for both scenarios. The results have shown that regardless of demand distribution pattern and customer order rate, the outcomes of the model are consistent and provide promising RFID technology adoption to improve inventory control of the entire supply chain system. The installation and unit cost of RFID implementation were estimated and considered to be the main barrier. Such model can offer the policymakers insight into how RFID might improve SCM system performance. Additional test has been conducted for demand with normal and triangular distributions using real data provided by ABC-Dubai Company. The results obtained from running the two models for these distributions are consistent with the original results.