Simulating inventory systems with forecast based policy updating

Abstract

This paper presents an object oriented framework that facilitates modeling inventory systems whose policy updating is driven by forecast estimates. In an inventory system, the forecast estimates and the forecast error measures are used to set the inventory policy. A simulation approach can address questions regarding the choice of the forecasting technique and the frequency of updating the policy, especially in non-stationary demand scenarios. This paper discusses how the framework can be used to develop simulation models through which these questions can be addressed. In addition, two examples illustrate how to use the framework and how to analyze supply chains with forecast based policy updating.

Investigating the effect of demand aggregation on the performance of an (R, Q) inventory control policy

“…The general capabilities of the JSL are described in Rossetti (2008). The supply chain and inventory modeling capabilities of the described in Rossetti et al (2008). The key components of the simulation model are the demand generator and the (r, Q) inventory system model.…”

Simulating Demand Uncertainty and Inventory Control Variability of Multi-Echelon Distribution Supply Chain

“…Ng et al, have simulated the running of supply chains composed of N echelons, with stochastic lead times and they have compared the types of inventory control policies (Ng, 2003). Rossetti et al, have analyzed and simulated a system composed of N echelons and N products, and taking into account the variability of demand (Rossetti, 2008). The model allows changing the inventory control policy according to the forecasts of anterior demands.…”

Simulation and Analysis of Mission Capability Degrades Due to Supply for the B-1 Bomber

“…Other similar studies 5,6 focus on responses such as transportation costs, inventory costs, utilization of resources, inventory level, lead times and order cycle times. Rossetti et al 7 use simulation to understand how changes in forecasting techniques and policy updates affect performance of an inventory system. Some simulation studies on the AF supply chain include Faas and Miller, 8 looking at an autonomic logistics system for a fighter aircraft and McGee et al, 9 capturing the multi-indenture multi-echelon nature of the AF supply chain and exploring various commercial logistics practices to improve efficiencies.…”