This article is a summary of the webinar “Supply Chain Optimization: A Robust Supply That Minimizes Costs” in which we presented a demo of the FICO Xpress Insight tool as a decision support system for stock management in the supply chain.
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We leave the recorded video of the session at the end of the article ?️⬇️
Stock management to meet uncertain demand
When a supply chain sets out to plan the orders needed from suppliers to stock its warehouses and the quantity of products it needs in stock to meet customer demand, they find that an uncertain quantity of each product is ordered each period.
The objective of any supply chain when planning and managing stock is to maximize demand fulfillment, minimize stocking costs and minimize distribution costs. To achieve this, we must optimize decisions on orders to suppliers and shipments to customers, taking into account multiple variables and restrictions, such as: maximum and minimum order quantities to suppliers, maximum warehouse capacity, unit cost of stock, fixed and variable costs per order and quantity, delivery times, demand, shipping costs, penalties, etc. Only in this way will we be able to answer questions such as: When should I order and how much of each product should I buy to meet demand? From where to where should I ship it to make it more economical?
Orders to suppliers and shipments to customers
After the exposition of the problem, in decide4AI we explained our proposal of a MILP model in which introducing data such as the demand prediction (previously done thanks to a predictive analytics model); the geographical distribution of suppliers, warehouses and customers; the fixed and variable costs of orders and shipments, etc.; we get to know what would be the optimal stock management along the supply chain to achieve the objectives previously exposed. In the webinar we explain in a more extensive way the problem and the solution with MILP, going into each of the phases of the model.
After the presentation of the problem and the proposed solution, in the webinar we showed what the decision support system for stock management in the supply chain would be like, using the tool that concerns us: FICO Xpress Insight.
The tool has an intuitive and friendly user interface that facilitates and gives objectivity to the scheduling task, and offers graphical analysis of the system status through KPIs. Helping to manage stocking throughout the supply chain in an optimal way thanks to FICO’s mathematical optimizer.
Finally, we carried out a DEMO LIVE in which we showed the use of the tool through different scenarios, going through the visualization screens, the data input and output configuration, the different scenario simulation options, etc.
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