Applying system dynamics approach to modelling effects of strategic production performance on supply chain: food and beverage industries

Food and beverage industries have decisive rule due to amount of employment and significant income generation. At micro perspective, due to the wide range of influencing factors, trends do not follow linear behavior and their analysis with non-dynamic tools is challenging. In general, the food and beverage industries in Iran, in addition to the global challenges, are facing many problems that make the prevailing environment more complicated. Among these problems, we can mention the old equipment, difficult access to quality raw materials due to sanctions and the instability of economic indicators. Therefore, if strategies performance cannot be adjusted in line with the market, the resulting losses can be significant and irreparable. In this paper, we developed a system dynamics model (simulation in Vensim) to investigating the production strategies and market in a complex space. For this purpose, we run the simulation 12 times with respect to 4 policies and 3 scenarios. The results show that due to profitability, the strategy of deleting loss products achieve the highest score of performance. Meanwhile, strategy of hybrid production (outsource and factory production) selected due to market penetration.