Inventory Simulation under Uncertainty Demand with Conditional Distribution

The sales forecast is a prerequisite for the inventory decisions in the practical life. The right selection of the forecasting model to improve the inventory management can increase the customer service level and determine a better performance for the supply chain. The forecast performance should not only be evaluated by its standard error, but also its impact in the organization performance measures. The sales forecast should not be considered an individual function, but as an important part of supply chain management. By using simulation, managers are able to create a model of their supply chain systems and test various levels of input that can emulate real-life inconsistencies. We assume that we can model the supply chain as a network that each stage in the supply chain operates with a periodic review base-stock policy, that demand is bounded and that there is guaranteed service time between every stage and its customers. This study uses the analytic solver program in excel that does the randomization process on the variable demand.