introduction to logistics and supply chain management cold storage warehouse simulation a case for fruit products

General flowchart When the cold storage warehouse receives goods from truck, the staff will unload, detect for damage, compare with the purchasing orders PO, and then sort the goods base

VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING & MANAGEMENT

INTRODUCTION TO LOGISTICS AND SUPPLY CHAIN MANAGEMENT

COLD STORAGE WAREHOUSE SIMULATION – A CASE FOR FRUIT PRODUCTS

Student Name & ID : Nguyen Thi Ngoc Han – IELSIU21195

Dinh Thuy Nguyen – IELSIU21217 Truong Duc Hieu – IELSIU21200 Le Phu Huy – IELSIU21095

Ho Chi Minh City, Vietnam JULY/2022

VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING & MANAGEMENT

INTRODUCTION TO LOGISTICS AND SUPPLY CHAIN MANAGEMENT

COLD STORAGE WAREHOUSE SIMULATION – A CASE FOR FRUIT PRODUCTS

Student Name & ID : Nguyen Thi Ngoc Han – IELSIU21195

Dinh Thuy Nguyen – IELSIU21217 Truong Duc Hieu – IELSIU21200 Le Phu Huy – IELSIU21095

Ho Chi Minh City, Vietnam JULY/2022

We are grateful to Dr Nguyen Van Hop, as well as all the lecturers and teaching assistants from Industrial Engineering Management , for organizing this course and providing us a clearer vision about our major

Besides, our completion of this project could not have been accomplished without our teaching assistants, Mr Tan, Ms Hoa, and Ms Chi for helping us with technological problems

ABSTRACT

Starting in 1996, commercial cold storage in Vietnam was first built by Konoike Vinatrans, a joint venture between Konoike Transport (Japan) and three Vietnamese enterprises including Vinatrans, Vinalink, and Vinafreight In 2007, the cold storage market exploded with the appearance of four new cold storage Since then, Vietnam's cold storage market has become attractive to both domestic and foreign cold storage suppliers, especially at a time when Covid 19 is still affecting goods Cold storage warehouse plays a key role in developing Vietnam's agriculture and in bringing clean goods to consumers Therefore, this study will describe the operation of cold storage and analyze the data related to this issue To answer the research question, our team ran a test and compared the metrics from different test runs At the same time, we compared the role of cold storage warehouse in the supply of commodities between the two periods of pre-pandemic and post-pandemic of Covid 19 Our research has shown an important contribution of cold storage to export goods during the raging Covid 19 Pandemic We suggest that cold storage should be focused on and developed further by investors because the demand for preservation is increasing not only for agricultural products but also for other essential commodities such as

seafood and vaccines that need to be protected under special temperature conditions

TABLE OF CONTENTS

ACKNOWLEDGEMENT I ABSTRACT II LIST OF FIGURES V LIST OF TABLES VII

3.1.1 Case 1: Before COVID-19 pandemic 36

3.1.2 Cases 2: During COVID-19 pandemic 40

LIST OF FIGURES

Figure 2 1: Process for receiving and delivering of Luc Ngan Lychee products 4

Figure 2 2: General flowchart of cold storage warehouse 5

Figure 2 3: Detail flowchart of cold storage warehouse 6

Figure 2 4: Inbound of Luc Ngan Lychee in cold storage warehouse 7

Figure 2 5: Outbound of Luc Ngan Lychee in cold storage warehouse 8

Figure 2 6: Inbound flowchart 12

Figure 2 7: Outbound flowchart 13

Figure 2 8: Arena model 14

Figure 2 9: Arena model part 1 14

Figure 2 10:Arena model part 2 16

Figure 2 11: Arena model part 3 17

Figure 2 12: Arena model part 4 18

Figure 2 13: : Arena model part 5 19

Figure 2 14: : Arena model part 6 19

Figure 2 15: Arena animation 21

Figure 2 16: The model has 1 forklift with velocity 75 feet per minute 21

Figure 2 17: Waiting time with 1 forklift - speed 75 feet per minute 22

Figure 2 18: The model has 2 forklifts, each has a velocity of 75 feet per minute 22 Figure 2 19: Waiting time with 2 forklifts - speed 75 feet per minute 23

Figure 2 20: The model has 3 warehouse staff positions, each of position has 1 staff 23

Figure 2 21: Waiting time with 1 staff in each position in three processes 24

Figure 2 22: The model has 3 warehouse staff positions, each of position has 2 staffs 25

Figure 2 23: Waiting time with 2 staffs in each position in three processes 25

Figure 2 24: Run Setup with 10 replications 26

Figure 2 25: Waiting time after 10 replications 27

Figure 2 26: Run Setup with 76 replications 28

Figure 2 27: Waiting time results after 76 replications 28

Figure 3 1: Average monthly consumption of fruits per capita in Vietnam from 2010 to 2020 (in kilograms) 36

Figure 3 2: : The money spent on vegetables and fruits in traditional markets(Department of Growth - Ministry of Agriculture and Rural Development) 37

Figure 3 3: The percentage of money spent annually on particular food(Department of Growth - Ministry of Agriculture and Rural Development) 37

Figure 3 4: Shrinkage based on some food(Environment Agency) 38

Figure 3 5: Capacity of commercial cold storage suppliers in Vietnam(Stopple’s statistics) 39

Figure 3 7: Congestion of trucks at the border gate(Source: Nguoi Lao Dong) 41

LIST OF TABLES

Table 2 1: Decision data 9

Table 2 2: Data analysis 9

Table 2 3: Data from the material 10

Table 2 4: Distribution of problem process 11

Table 2 5: Data type of create modules 11

Table 2 6: The average waiting time of processes 30

Table 2 7: The average waiting time of processes by process analyzer tool 30

Table 2 8: The mean value and the sample standard deviation in simulation 32

Table 2 9: Table of values based on the test statistics 33

Table 2 10: Table of resource utilizations by using the process analyzer 34

1.1.2 Problem statement

According to the World Cold Chain Summit in March 2018 in Ho Chi Minh City, Vietnam loses about 7 million tons of fruits and vegetables during storage and transportation yearly Fruits and vegetables account for 31% which is the largest share of wasted food products Of which 26% came from damage due to improper storage, much higher than the Southeast Asian with an average of 15% In addition, cold storage is also one of the most effective solutions for the logistics industry when products are being congested at border gates due to the situation of the Covid-19 epidemic Thus, Vietnam needs to invest in the infrastructure to store fruits and vegetables appropriately

To make the simulation become closer to reality, our group took the Luc Ngan lychee as the sample product The annual consumption of lychee is between 60 and 70 percent in the domestic market; meanwhile, Luc Ngan lychee accounts for 30-40% of the total fresh lychee consumed in the domestic market, especially in Ho Chi Minh City and Ha Noi Capital The market in the south has enormous potential, but it is limited in terms of preservation, so it can only consume 10-15% of the output Without a cold storage warehouse with appropriate conditions, the quality and quantity of lychee could be seriously reduced and then caused significant economic

losses.(Source: The eassay on learning about lychee Luc Ngan - Bac Giang, written

by Department of Science and Technology in Bac Giang Province)

1.2 Objective

The target of this cold storage warehouse:

In this project, we will utilize Flexsim and Arena to visualize the road of transporting process to Ho Chi Minh City and create a cold storage warehouse for fruits, respectively To make the simulation become closer to reality, our group took the Luc Ngan lychee from Bac Giang province as the sample product The performance has an input and releases an output

Thanks to simulation, we can adjust, decide, and manage this system as we desire to observe the results without affecting any real systems Animations are built in the

simulation to illustrate the system operation livelier

1.3 Scope and limitations

Time limitation is the most serious obstacle Due to the lack of specialized knowledge, our group spent most of the time searching for study materials and data Besides, at the first period, it was difficult for us to understand technical knowledge about simulation, which takes quite a lot of time Therefore, our group had struggled with scheduling the time to finish our model

CHAPTER 2 - SYSTEM DESCRIPTION

2.1 Conceptual design 2.1.1 Idea

2.1.1.1 General in-out

Our group built the process of carrying and storing commodities, which are the Luc Ngan lychees from Bac Giang particularly, to cold storage warehouse in Ho Chi Minh City where the lychees are consumed most domestically Firstly, Luc Ngan District (located in Bac Giang Province) is the place that needs to transport the lychee into Ho Chi Minh City Next, after being harvested and preliminary treated, the lychees are put into foam boxes, marinated with ice and packaged seriously.Then, these boxes of lychee are loaded to trucks and delivered to Ho Chi Minh City Then, trucks delivery them from 1 to 3 days to cold storage warehouses, which has the temperature ranging from 4 to 5 Celsius degrees Finally, based on orders that suppliers have already had, goods are shipped to the modern trade channel including supermarkets and minimarts in Ho Chi Minh City

The process of transporting and consuming Luc Ngan lychees is depicted in Figure 2.1 below This process is divided into 2 parts Part 1 is to transport lychee to cold storage warehouse for storage purposes Part 2 is the process of transporting goods for consumption at supermarkets in Ho Chi Minh City

Figure 2 1: Process for receiving and delivering of Luc Ngan Lychee products

2.1.2 Flowchart

2.1.2.1 General flowchart

When the cold storage warehouse receives goods from truck, the staff will unload, detect for damage, compare with the purchasing orders (PO), and then sort the goods based on the criteria for each type After that, the cold storage warehouse will provide forklifts for moving the goods into storage area After 1-2 weeks, the goods will be moved to the staging area from the storage area to prepare for orders Then the goods will be labelled and loaded to the truck to transport to the customers The figure 2.2 shows the steps of transporting and storing lychee in a general way in the cold storage warehouse

Figure 2 2: General flowchart of cold storage warehouse

2.1.2.2 Detail flowchart

From the general flowchart in Figure 2.2, the detailed flowchart of the process from truck arrives to truck leaves out of cold storage warehouse is shown in Figure 2.3

Figure 2 3: Detail flowchart of cold storage warehouse

INBOUND: When goods are transported by containers to cold storage warehouse,

the container will be assigned to a suitable location in preparation for unloading The goods will be unloaded from the containers by the warehouse staff Goods will continue to be checked for damage and compared to purchasing orders after being unloaded from the containers At the stage of inspecting for the damage of goods, 2 cases will happen In case 1, when goods do not meet the acceptable standards of being damaged, the warehouse staff will contact suppliers to carry out the procedures following the contract In case 2, goods that satisfy the standards will be approved and moved to the sorting step In the sorting step, the goods will be divided according to their own criteria for each type and then decided the next step for each types In the case of Luc Ngan Lychee in our simulation assumption, with the type 1 goods, which have the VietGAP certificate, they will continue to be put into cold storage for storage purpose In the opposite, with the type 2 goods, which do not have the VietGAP certificate, the cold storage warehouse will contact suppliers and then collectors from suppliers will come and pick up type 2 goods After completing all the following steps, the type 1 goods will be transported into the storage area by

forklifts The figure 2.4 will explain the inbound of Luc Ngan Lychee in cold storage warehouse visually

Figure 2 4: Inbound of Luc Ngan Lychee in cold storage warehouse

STORAGE: Goods are stored in cold storage at a suitable temperature and placed

on shelves They will be stored for about 1 to 2 weeks in the storage area

OUTBOUND: In this process, goods will be transported out of cold storage to

prepare for shipping to supermarkets and minimarts in Ho Chi Minh City Firstly, the order picking process will be conducted, the goods will be transported out of the cold storage area by forklifts and gathered at staging point Then the labeler will check the quality and quantity of goods and label on these goods to get ready for being taken out of the warehouse After that, the goods are loaded by the warehouse staff to the container and transported to the modern trade channels like supermarkets and minimarts The figure 2.5 will explain the outbound of Luc Ngan Lychee in cold storage warehouse visually

Figure 2 5: Outbound of Luc Ngan Lychee in cold storage warehouse

2.2 Physical model

2.2.1 Data collection:

To simulate, our model need the time data of processes such as Unloading,

Detecting, Sorting, Labeling, Loading goods, Loading goods type 2 Data were

collected through the observation method, which is measuring without trying to affect the process, from the 4th to the 22th of May in 2022

 Data type: Time(minutes)

 Products: Luc Ngan Lychee Boxes

 Flow: When the truck enters the door of cold storage warehouse, the staff will

do the Unloading, Detecting, Sorting the goods and then move them into the

storage area After 1 to 2 weeks, the goods will be moved out and start

Labelling Finally, the staff will do the Loading goods and transport them to

the customers In terms of the Loading type 2 process, after Sorting, there are

2 types of goods; however, the amount of goods type 2 is very small compared to the amount of type 1 Therefore, our simulation mostly focuses on the flow of goods type 1

 Time period from Unloading to Storage is about 2 to 3 hours(information from advisor) and we assumed that the time period from Storage to Loading

goods is the same

Thus, the data collection is the Appendix 1

Based on the data collected from reality, we received the assumption rates of

Detecting and Sorting process

Table 2 1: Decision data

Percentage of accepting Percentage of rejecting

With the n = 40 (sample)

Table 2 2: Data analysis

Process

Unloading Detecting Sorting Labelling

Loading goods

Loading types 2 Average

time

(minutes) 49.67 29.07 34.78 29.44 52.08 80.44 Sample

2.2.3 Input data

During data collection, because of the confidentiality of the data inside the cold storage, our team was advised that the data used during the simulation should be assumed and collected from experienced people and online sources in a reasonable and reputable manner After discussing seriously, our group agree to use the input data based on the material A simulation study on warehouse loading system the case of poultry feed production factory on the International Journal of Logistics Systems and Management of authors Emami, S B., Arabzad, S M., & Sajjadi, S M (2014) Because our flow does not contain all the processes of the material, our group decided to select the data of the processes included in our flowchart only

Table 2 3: Data from the material

Order Name of process Distribution Expression Unit 1 Unloading process BETA BETA(2.08, 0.64) Minute 2 Checking process BETA BETA(0.87, 2.06) Minute

Our group cannot find reliable data for other processes Therefore, to avoid the bottleneck, which is the point of congestion in a system, our group decided to assume the data of these processes as same as processes that we have already known to achieve the ideal system Our group also have discussed with our advisor to assume appropriate data

Table 2 4: Distribution of problem process

Table 2 5: Data type of create modules

Order Information Input position in model

Truck arrive Infinite arrivals

4 Time between arrival Collector of suppliers

Order Name of process Distribution Expression Unit

7 Storaging in warehouse UNIF UNIF(7, 14) Day

9 Max arrival of trucks to transport goods

Vehicle Infinite arrivals

2.2.4 Arena Simulation 2.2.4.1 Logical Model

Figure 2 6: Inbound flowchart

Truck arrive: Trucks transport goods to the cold storage warehouse and are parked

at the designated location for unloading

Unloading vehicle: The staff will unload goods from the truck into the warehouse

to prepare for checking

Checking for problems: The staff will check for the damage to the goods and

compare them to the purchasing order If the damaged percentage of the goods is acceptable, the goods will be moved to the next step; otherwise, the warehouse staff

will contact the suppliers to discuss the procedures to take care of the damaged goods

Sorting: The staff will classify the goods according to the standards

Put-away: Goods are transported by forklift to the shelves in cold storage

After completing the put away steps, the goods are stored for preservation purposes in the storage area

Storage: Goods are stored from 1 to 2 weeks

Figure 2 7: Outbound flowchart

Order picking: Retrieving goods from racks when an order is requested

Staging: Goods are gathered at one point after being taken out of the storage are to

wait for the next stage

Labeling: The staff will attach the label to goods

Loading vehicle: The staff will load the goods on the trucks that have already waited

at the designated place

Truck leave: When the staff receive enough orders, the truck will deliver them to

the supermarkets and minimarts that have ordered previously

2.2.4.2 Arena model

Figure 2 8: Arena model

Build the model simulation by arena application version 14

The system is simulated based on the detailed flowchart and used a similar functional model to represent each component However, these components do not help to simulate the most accurately but only simulate to a certain extent At the same time, the system is added with new modules that are suitable for the operation of the system

2.2.4.3 Model description

Figure 2 9: Arena model part 1

Truck arrive (Create module): The module notifies that the trucks come to cold

storage warehouse It also describes the number of goods each arrival would be unloaded and the time between arrivals

Number unloaded goods (Record module): The module counts the number of goods

entered the cold storage warehouse

Time in WH(Assign module): The module is used to assign a measured value of the

time when the goods entered the cold storage warehouse

Unloading vehicle (Process module): The warehouse staff unloads goods from the

trucks into the warehouse

Detecting problems (Process module): The detectors check for the damage and

compare with the purchasing orders

Not detecting problems (Decide module): The goods will be selected if their

damaged percentage is acceptable, and their information is the same as the purchasing order

Number passed detecting goods (Record module): Recording the quantity of goods

successfully get over the detecting step

Number failed detecting goods (Record module): Recording the number of goods

with the damaged percentage is too high

Contacting to suppliers (Dispose module): The cold storage warehouse will contact

suppliers and eliminate the damaged goods out of the main good flow

Figure 2 10:Arena model part 2

Sorting (Process module): The detectors will sort the goods based on their criteria

of each type

Sorting into 2 types (Decide module): Goods will be sorted into type 1, which is

appropriate to storage to wait for transporting to the modern trade channel, and type 2, which is transported out of warehouse by collectors of suppliers

Number goods type 1 (Record module): Recording the number of good types 1

Type 1 (Assign module): Using the assign module to assign a measured value of the

number of good types 1

Type 2 (Assign module): Using the assign module to assign a measured value of the

number of good types 2

Figure 2 11: Arena model part 3

Transforming into 1 forklift (Batch module): Goods type 1 will be loaded on a

forklift

Put-away (Station module): Destination of forklifts and loading goods type 1 on

forklifts to move into the storage area

Request forklift for put-away (Request module): Requesting forklift to move goods

type 1 to the storage area

Transport to put-away (Transport module): Transport goods by forklift to cold

Loading type 2 (Process module): The warehouse staff will load goods type 2 on

the truck for the collector to transport them

Number goods type 2 (Record module): Recounting the amount of goods type 2

Done type 2(Dispose module): Completing the flow of goods type 2

Figure 2 12: Arena model part 4

Vehicle (Create module): Creating trucks to deliver goods to customers

Waiting for type 1 (Hold Model): Waiting until enough order

Ready to transport type 1 (Assign model): Using the assign module to notify that

there is a vehicle to transport goods type 1

Number vehicle (Record module): Counting the number of trucks arriving

Transporting to supermarket (Dispose model): Delivering goods type 1 to

supermarkets and end the flow of goods type 1

Collector of suppliers (Create module): Using create module to create collector to

come to the warehouse to collect goods type 2

Waiting for type 2 (Hold module): Waiting until there is enough number of good

types 2

Ready to transport type 2 (Assign model): Using assign module to notify that

collector come to deliver goods type 2

Transporting to collector (Dispose module): Collector picks up the goods type 2

and finishes this process

Figure 2 13: : Arena model part 5

Storage (Station module): After being classified, the first-class goods will be stored

in cold storage

Free forklift 1 (Free module): Indicating that the forklift is available for other

processes

Time travel in warehouse (Record module): Counting the time from the unloading

step to the goods finally stored in the storage area

Store 1 (Store module): Illustrating that the goods are stored inside the storage area

Store in (Record module): Counting the number of goods entered the storage area

Storaging in warehouse (Process module): Goods will be stored in cold storage

from 1 to 2 weeks

Unstore 2 (Unstore module): Illustrating the goods are end the storage time and

ready to move out

Store out (Record module): Counting the number of goods out of the storage area

Request forklift for order picking (Request module): Requesting the forklift to

move the goods out of storage area

Transport to staging (Transport module): Goods are moved to the staging position

after being taken out of the storage area by the forklift

Figure 2 14: : Arena model part 6

Staging (Station module): Destination of preparing for shipping the goods out of

warehouse

Free forklift 2 (Free module): Indicating that the forklift is available for other

processes

Separating forklift 1 (Separate module): Goods will be taken off the forklift

Labeling (Process module): The labelers will attach the label on the goods

Transforming into 1 vehicle (Batch module): The condition of a package must have

a constant number of goods, so batching the goods into a number of goods for a truck helps to ensure the above requirements

Signal to vehicle (Assign module): Sending a signal to empty trucks to ship the

goods

Waiting for vehicle (Hold module): Waiting until enough orders

Number waiting for vehicle (Record module): Counting the number of goods

waiting for delivery

Vehicle came (Assign module): Using assign module to notify that a truck is

Time out of warehouse (Record module): Counting the time from the moment the

goods are moved out of storage area to the moment finishing a deal

Done order (Dispose model): Completing order

The animation layout is created using the Arena program

Figure 2 15: Arena animation

2.3 Operation description:

2.3.1 Base scenario:

Trial 1: 1 transporter(forklift) with velocity 75 feet per minute in the system

Figure 2 16: The model has 1 forklift with velocity 75 feet per minute

Simulation sets up:

Number of replications: 1 Warm – up period: 1 (day) Replication length: 30 (days) Hour per day: 24 (hours) Base time units: minutes

Figure 2 17: Waiting time with 1 forklift - speed 75 feet per minute

In figure 2.17, to request a forklift for put away and order picking, we must wait for 3.7277 minutes and 28.8948 minutes on average, respectively Also, the maximum waiting time periods are 26.9484 minutes and 184.79 minutes, respectively We could witness the remarkably high value of waiting time for a forklift Therefore, we tried to change the capacity of transporter in the system We decided to increase the number of transporters while maintaining the velocity as the first trial

Figure 2 19: Waiting time with 2 forklifts - speed 75 feet per minute

After increasing the number of transporters to 2 transporters, we can see that the waiting time has been improved significantly The average waiting time to request forklift for put away and order picking have been decreased remarkably to 0.2899 minutes and 1.0086 minutes, respectively The maximum period of waiting time to request forklift for put away and order picking has declined by about 15 minutes (from 26.9484 min to 11.6950 min) for put away and experienced about 7 times decrease from the initial value (from 184.79 min to 26.3235 min)

However, we could see that the average periods of waiting time for unloading, loading goods, and loading type 2 are extremely high

Figure 2 20: The model has 3 warehouse staff positions, each of position has 1 staff

Figure 2 21: Waiting time with 1 staff in each position in three processes

The average waiting time for loading goods, loading type 2, and unloading vehicle are 19187.27 min, 115528.93 min, and 109.95 min respectively, which are far higher than we expected Simultaneously, the maximum values of waiting time for these processes are 22945.57 min, 22903.78 min, and 345.57 min respectively, which means that some processes might take about 8 – 13 days to accomplish It is impossible for perishable products to maintain their qualities in the normal condition for such a long period of time After considering carefully, we decided to change the capacity of resources in these processes while still maintaining the capacity of forklifts and their velocity in the system from the second trial Therefore, we tried to increase the capacity of the resource warehouse staff 1, warehouse staff 2, and warehouse staff 3

Trial 3: 2 staffs for each of positions, namely warehouse staff 1, warehouse staff 2

and warehouse staff 3

Figure 2 22: The model has 3 warehouse staff positions, each of position has 2 staffs

Figure 2 23: Waiting time with 2 staffs in each position in three processes

After changing the capacity of resources into 2 staff for each position, we can see that the average values of waiting time in these processes have decreased considerably (from 19187.27 min to 46.9630 min) in loading goods, (from 11528.93 to 77.8426 min) in loading type 2, and (from 109.95 min to 49.5016 min) in unloading vehicle Besides, the maximum values of waiting time have declined strikingly, namely from 22945.57 min to 306.54 min for loading goods, from 22903.78 min to 325.78 min for loading type 2, and from 345.47 min to 129.54 min for unloading vehicle Therefore, we could believe that the system was improved

Nevertheless, these results were received in 1 replication To increase the precision of the model and reduce variability in results, we tried to increase the number of replications with 10 replications