Introduction

We wrap up the course with an intellectual excursion into inventory management: we need to keep track of stock, reorder from our supplier, and make decisions on how many units of a perishable good to make available each day under an uncertain demand.

Learning outcomes

This module will help you do the following:

• Simulate demand and define rules for supply to meet it
• Apply normally-distributed pseudorandom numbers
• Simulate lead time (the delay between ordering a resupply and receiving it)
• Make decisions involving operational costs and profits
• Use time series to keep a track record
• Study the effects that simulation parameters have on performance measures or other metrics of interest
• Aggregate data from multiple replicas of a simulation with fixed parameters
• Visualize aggregate data across several parameter configurations
• Choose parameter configurations that provide a good compromise between multiple criteria

Warm-up

Warm-up assessment

Based on the tragic story of the video, make a little checklist (based on your best understanding and creativity, no need to look anything up) of common-sense considerations that anyone in retail should keep in mind when attempting to ensure that they are able to meet their customers' demand while not stockpiling items in vain, risking elevated storage costs or even spoilage of perishable goods. List the considerations and briefly elaborate (one sentence per item should suffice) why you find it important.

Concepts

After this module, you should be familiar with the following concepts:

• Inventory management
• Demand
• Profit
• Reorder point
• Lead time

Remember that you can always look concepts up in the glossary. Should anything be missing or insufficient, please report it.