Inventory Management Simulation Based on Theory of Constraints for Microsoft

Inventory Management Simulation Based on Theory of Constraints for Microsoft

Development of simulation model to support changing of stock and time buffer management policies throughout the global supply chain of electronic devices. The model captured the supply chain from tier 2 suppliers of components to shelves of retail stores in more than 30 countries.

Period: September 2015 – February 2016
Industry: Electronics
Client / Partner: Microsoft / Goldratt Research Labs

Project objective

Offer the algorithms of stocks planning that allow to reduce the dependency of target stock level on sales forecasting accuracy

The main stages of work and characteristics of the model

  • Setting up a modeling problem
  • Development of the simulation model
  • Verification of the model
  • Technical and methodological support of scenario analysis using the model

Model input data

  • Actual opening balances of end-products in warehouses
  • Information about inventory value
  • Forecast of demand by storage units
  • Actual quantity of shipments every day from every distribution center
  • Parameters of suggested inventory management algorithms

The main structural elements of the model

  • Input data file of scenario in MS Excel format
  • Simulation model with interactive presentation, batch launch mode for fast scenario comparison, mode of sensitivity analysis

Model output data

  • Inventory movement in any modeling period
  • Comparison of modeling and actual stock value
  • Service level of delivery points supply

Project result

  • Testing of suggested replenishment algorithms
  • Demonstration of the effect of suggested algorithms using the comparison of the results of modeling with historical data
  • The simulation model is passed to the client for further use as an analytical tool for medium-term planning