Inventory Simulation: Test Inventory Strategies in a Low-Risk Environment
Strategic design changes can be challenging to understand, given complexities of supply chains and multi-echelon interdependencies. Policy changes can be
difficult and risky to apply, and many companies are using rules of thumb inventory policy setting, resulting in too much working capital than what’s actually needed. Optimization results also lack order level details your planners may need to predict stock-outs and backorders at certain points in time.
You need a quick, low-risk way to test inventory optimization results to understand the potential impact on service levels. LLamasoft Supply Chain Guru inventory optimization enables you to model supply chain network operations, then run and test inventory policy experiments and optimization scenarios to build dependable, repeatable inventory optimization processes.
How Does It Work?
In a multi-echelon supply chain network, first use Supply Chain Guru to run safety stock optimization to understand where inventory needs to be placed, and how much. As a user you don’t have to worry about generating demand from forecast statistics for say new product introductions, or safety stock target setting for forward looking demand, we do that for you. Supply Chain Guru reads this optimization information to understand net lead time for each site/product combination and the optimal inventory policy recommendation, combined with demand for that SKU. In addition to helping users understand average inventory levels for each SKU, the inventory simulation produces a time-series graph, which helps you visually understand inventory positions and levels over a period of time.
Benefits of Inventory Simulation
- Quickly verify the performance of the optimal inventory policies in simulation in terms of service levels achieved
- Automatically generate demand for site/SKU combinations that match forecast statistics and historical demand patterns
- Generate a time-series graph that shows order level detail and on-hand inventory by day for each site-SKU combination