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Guide 11 of 20
Simulation
Test decisions before making them and see their effect on cost and service.
Who uses it: Management and planning3 min
What it's for
To answer "what happens if…?" without risking the real operation.
Step by step
- 1
Arena
Move the levers — forecast accuracy and bias, demand variability, lead time and its variation — and watch total cost, inventory value, service level, turns and stockouts week by week.
- 2
Diagnostic and scenarios
The diagnostic finds your supply chain's weak spots and savings, and saved simulations let you compare scenarios (for example a slower supplier or more variable demand).
Example: A supplier running late
You raise lead-time variation from 2 to 6 days: the arena shows how service level drops and how much more safety stock it would take to hold it.
Tips
- Change one lever at a time to understand its effect.