Market trends have shown a shift toward more customized products. This trend has resulted in more product lines and demand variability. Manufacturers increase the range of product variety offered to the market to provide more choice for customers. Increased product variety to offer open possibility to a closer match between customer preferences and offered products, which lead to the potential of improving or maintaining market share and/or yielding higher prices. On the other hand, higher product variety could lead to operational inefficiencies. The variation of products leads to the complexity of the production chain system. The impact of high variety production is known to increase the inventory level of the storage. Coordination is also known to help reduce the pain. But there are many ways of doing the coordination. In order to reduce the pain of increasing inventory level, some studies already developed the solutions in the form of algorithms and tested it with an analytical model, but very few are using simulation models. The reason against building a simulation model because these take a long time to build and to run. But, there is some weakness to the analytical model like the simplifying assumptions. Some simplifying assumptions need to be carefully validated either through an actual implementation or using simulation. Simulation models often used in a manufacturing environment to help check the decision before being deployed into the real system. This study creates digital-physical system model of a production chain system and simulates it in a structured approach to provide the ability to get insight from the production chain system that does a high variety of products. The objective is to prove the proposed coordination in a production chain system can reduce inventory level even in high variety production reduce the risk of production stops. From the simulation result, knowledge is more known that a correct combination between batch size and truck size can have an impact in inventory level. But if the batch size and truck size cannot be changed, the proposed way of coordination can help reduce the increasing inventory level because increasing variety. The results show, the proposed coordination successfully shifts the effect of increasing inventory, but the effect depends on what batch size and truck size of the system.

Market trends have shown a shift toward more customized products. This trend has resulted in more product lines and demand variability. Manufacturers increase the range of product variety offered to the market to provide more choice for customers. Increased product variety to offer open possibility to a closer match between customer preferences and offered products, which lead to the potential of improving or maintaining market share and/or yielding higher prices. On the other hand, higher product variety could lead to operational inefficiencies. The variation of products leads to the complexity of the production chain system. The impact of high variety production is known to increase the inventory level of the storage. Coordination is also known to help reduce the pain. But there are many ways of doing the coordination. In order to reduce the pain of increasing inventory level, some studies already developed the solutions in the form of algorithms and tested it with an analytical model, but very few are using simulation models. The reason against building a simulation model because these take a long time to build and to run. But, there is some weakness to the analytical model like the simplifying assumptions. Some simplifying assumptions need to be carefully validated either through an actual implementation or using simulation. Simulation models often used in a manufacturing environment to help check the decision before being deployed into the real system. This study creates digital-physical system model of a production chain system and simulates it in a structured approach to provide the ability to get insight from the production chain system that does a high variety of products. The objective is to prove the proposed coordination in a production chain system can reduce inventory level even in high variety production reduce the risk of production stops. From the simulation result, knowledge is more known that a correct combination between batch size and truck size can have an impact in inventory level. But if the batch size and truck size cannot be changed, the proposed way of coordination can help reduce the increasing inventory level because increasing variety. The results show, the proposed coordination successfully shifts the effect of increasing inventory, but the effect depends on what batch size and truck size of the system.

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