Simulation Configurations
Configure your supply simulation to match your business rules, safety stock policies, and planning requirements. The simulation engine uses these configurations to determine when and how to generate replenishment recommendations.Configuration Overview
Supply simulation uses multiple configuration sources that work together:| Configuration | Purpose | Impact on Simulation |
|---|---|---|
| Safety Stock | Minimum inventory levels | Triggers replenishment when projected inventory falls below threshold |
| Lead Times | Transit and production times | Determines how far in advance orders must be placed |
| Replenishment Cadence | Fixed ordering intervals | Controls when replenishment orders can be placed |
| Fulfillment Mapping | Which warehouses serve which channels | Defines where demand is consumed from |
| Supplier Capabilities | What suppliers can provide | Determines source, MOQ, and capacity for orders |
| Source Types | Purchase, Production, or Transfer | Defines how inventory is replenished at each warehouse |
| Overstock Threshold | Maximum desired inventory | Identifies excess inventory situations |
Replenishment Cadence
What is Replenishment Cadence?
Replenishment cadence defines the fixed intervals at which the simulation can place replenishment orders. Rather than ordering whenever inventory falls below a threshold, cadence-based replenishment aligns orders to a regular schedule.A SKU-warehouse pairing must have a replenishment cadence configured to be eligible for simulation. Without a cadence, the simulation cannot generate replenishment orders for that pairing.
Cadence Types
| Cadence | Description | Order Frequency |
|---|---|---|
| Weekly | Orders placed on a specific day each week | Every 7 days |
| Monthly | Orders placed on a specific day each month | Every ~30 days |
| Quarterly | Orders placed on a specific day each quarter | Every ~90 days |
| Custom (Arbitrary Days) | Orders placed every N days | User-defined interval |
How Cadence Affects Simulation
On each day of the simulation, the engine checks whether the current day is a replenishment point based on the configured cadence:- If it is a replenishment day, the engine calculates how much inventory is needed to cover demand until the next replenishment point, accounting for lead time.
- If it is not a replenishment day, no new orders are generated for that day (unless safety stock breach detection moves an order earlier — see below).
Replenishment Quantity Calculation
When a replenishment point is reached, the order quantity is calculated as:- Project forward from the order’s expected landing date (order date + lead time) to the next replenishment point.
- Sum the forecasted demand over that coverage period.
- Add safety stock buffer to ensure inventory stays above the safety stock threshold.
- Subtract current projected inventory at the landing date.
- Apply MOQ rules — if the calculated quantity is below the supplier’s minimum order quantity, round up to the MOQ.
Safety Stock Breach Detection
The simulation includes a look-ahead mechanism that can accelerate order dates:- After calculating orders at regular cadence points, the engine scans the projection for days where inventory falls below safety stock.
- If a breach is detected before the next scheduled order would land, the engine moves the first order date earlier so that inventory arrives before the breach.
- This ensures safety stock is maintained even when demand spikes occur between cadence points.
Configuring Cadence
Set Cadence Type
Select the replenishment cadence:
- Weekly — choose the day of week
- Monthly — choose the day of month
- Quarterly — choose the day within the quarter
- Custom — enter the number of days between orders
Source Types
What are Source Types?
Source types define how inventory is replenished at each warehouse. Each replenishment order is classified as one of three types:| Source Type | Description | Source Entity |
|---|---|---|
| Purchase | Buy from an external supplier | Supplier |
| Production | Manufacture in-house | Production facility / warehouse |
| Transfer | Move inventory between warehouses | Another warehouse |
How Source Types Map to the Supply Chain
- Purchase orders flow from a supplier to a destination warehouse. The supplier must have a capability configured for the SKU, including lead time, cost, and MOQ.
- Production orders represent manufacturing at a facility. Production lead time determines how long manufacturing takes.
- Transfer orders move inventory from one warehouse to another. Transit lead time determines shipping time between locations.
Source Type and Simulation Behavior
The source type affects how the simulation processes each SKU-warehouse pairing:| Aspect | Purchase | Production | Transfer |
|---|---|---|---|
| Lead Time Used | Supplier lead time | Production lead time | Transit lead time (warehouse-to-warehouse) |
| Source Entity | External supplier | Same or linked facility | Source warehouse |
| MOQ Applied | Supplier MOQ | Production batch size | None (typically) |
| Dependency | Independent | May depend on component SKUs | Depends on source warehouse inventory |
Units of Measurement
When generating orders, the simulation respects the unit of measurement (UoM) configuration:- Each SKU has a default UoM used throughout the system.
- Suppliers may have a supplier-specific UoM that differs from the default.
- The simulation converts between UoMs when generating purchase orders, ensuring quantities are expressed in the supplier’s expected unit.
Dependency Graph
What is the Dependency Graph?
The dependency graph determines the order in which SKU-warehouse pairings are simulated. This is critical because some pairings depend on the results of others — particularly when transfers are involved.Why Order Matters
Consider a simple supply chain:How the Graph is Built
The simulation builds a dependency graph based on:- Fulfillment relationships — which warehouses fulfill which channels.
- Transfer routes — which warehouses supply other warehouses.
- Bill of Materials (BOM) — which component SKUs are needed to produce finished goods.
Topological Sort
The dependency graph is resolved using a topological sort, which produces a linear ordering where every pairing is processed before any pairing that depends on it:- Source pairings (those with no upstream dependencies) are processed first.
- Intermediate pairings (warehouses that both receive and send transfers) are processed next.
- Terminal pairings (end-of-chain warehouses fulfilling channels) are processed last.
The simulation includes cycle detection. If the dependency graph contains a cycle (e.g., Warehouse A transfers to B, and B transfers back to A), the simulation reports an error rather than entering an infinite loop.
Example: Multi-Warehouse Dependency
For a supply chain with three warehouses:| Pairing | Source | Depends On |
|---|---|---|
| SKU-001 @ Factory | Purchase from Supplier | None (processed first) |
| SKU-001 @ Distribution Center | Transfer from Factory | SKU-001 @ Factory |
| SKU-001 @ Regional Store | Transfer from DC | SKU-001 @ Distribution Center |
Safety Stock Configuration
What is Safety Stock?
Safety stock is buffer inventory that protects against:- Demand variability (unexpected spikes in orders)
- Supply delays (late shipments from suppliers)
- Forecast errors (actual demand exceeding predictions)
Setting Safety Stock
Configure at the SKU-warehouse level:Find Safety Stock Section
Locate the safety stock configuration for the desired SKU-warehouse pairing
Set Values
Define safety stock using one of the available methods:
- Fixed quantity — a specific number of units
- Days of coverage — enough inventory to cover X days of forecasted demand
Safety Stock Methods
| Method | Description | Best For |
|---|---|---|
| Fixed Quantity | A specific unit count as the minimum buffer | Products with stable, predictable demand |
| Days of Cover | Automatically calculated as X days of average forecasted demand | Products with variable demand patterns |
How Safety Stock Affects Simulation
During the day-by-day simulation, the engine tracks thesafety_stock_qty for each pairing each day. The simulation:
- Checks projected EOH (End on Hand) against the safety stock level after processing all consumption and supply events for the day.
- Generates alerts when inventory is projected to breach safety stock:
- Important — inventory is approaching safety stock levels
- Urgent — inventory is at or below safety stock, stockout is imminent
- Accelerates orders — if a safety stock breach is detected before the next cadence-based order would arrive, the simulation moves the order date earlier.
Example Configuration
| SKU | Warehouse | Method | Value | Effect |
|---|---|---|---|---|
| SKU-001 | Main | Days of Cover | 14 days | Safety stock = 14 × daily avg demand |
| SKU-002 | Main | Fixed | 500 units | Safety stock = 500 units always |
| SKU-003 | Regional | Days of Cover | 21 days | Higher buffer for longer lead times |
Lead Time Configuration
Types of Lead Times
| Type | Description | Used For |
|---|---|---|
| Supplier Lead Time | Days from placing a purchase order to receiving goods | Purchase source types |
| Transit Lead Time | Shipping time between warehouse locations | Transfer source types |
| Production Lead Time | Manufacturing time from start to completion | Production source types |
landing_date = order_date + lead_time. The simulation uses landing dates to project when incoming inventory will be available.
Configuring Lead Times
Supplier Lead Times
Set at the supplier capability level:- Go to Inventory → Suppliers
- Select the supplier
- View/edit capabilities for each SKU
- Set lead time (in days) per SKU
Warehouse Transit Lead Times
Configure transit times between warehouses:- Go to Inventory → Warehouses
- Access the Lead Times section
- Set the matrix of warehouse-to-warehouse transit times
Lead Time Impact on Ordering
The simulation uses lead times to work backwards from when inventory is needed:| If Lead Time Is… | Simulation Effect |
|---|---|
| Short (1–3 days) | Orders can be placed closer to when inventory is needed |
| Medium (7–14 days) | Orders must be placed 1–2 weeks in advance |
| Long (30+ days) | Orders must be placed well in advance; safety stock becomes more critical |
Fulfillment Mapping
What is Fulfillment Mapping?
Fulfillment mapping defines which warehouses fulfill demand from which sales channels. This mapping determines where demand consumption occurs in the simulation.Configuring Fulfillment
Multiple Fulfillment Options
A channel can be fulfilled by multiple warehouses:| Channel | Primary | Secondary |
|---|---|---|
| Website US | East DC | West DC |
| Website CA | Canada DC | East DC |
Fulfillment mapping is one of the inputs to the dependency graph. The simulation uses these mappings to determine which SKU-warehouse pairings need to be simulated and how demand flows through the system.
Supplier Configuration
Supplier Capabilities
Configure what each supplier can provide:| Setting | Description | Simulation Impact |
|---|---|---|
| SKUs | Which products the supplier provides | Determines eligible suppliers for each SKU |
| Lead Time | Days from order to receipt | Sets order-to-landing delay |
| Cost | Unit cost per SKU | Used for cost calculations on recommendations |
| MOQ | Minimum order quantity | Orders are rounded up to meet MOQ |
| Capacity | Maximum order quantity | Limits order size per supplier |
| UoM | Supplier-specific unit of measurement | Orders are converted to supplier’s UoM |
Setting Capabilities
Add Capabilities
For each SKU the supplier provides:
- Set lead time (days)
- Set unit cost
- Set MOQ and maximum capacity
- Configure UoM if different from SKU default
MOQ Handling in Simulation
When the simulation calculates a replenishment quantity, it applies MOQ rules:- If the calculated quantity is below the MOQ, the order is rounded up to the MOQ.
- If the calculated quantity is above the MOQ, it is used as-is (no rounding).
- The additional units from MOQ rounding contribute to higher projected inventory, which may defer the next order.
Simulation Parameters
Time Horizon
Configure how far into the future to simulate:| Setting | Typical Value | Use Case |
|---|---|---|
| Short | 30 days | Tactical planning and urgent orders |
| Medium | 90 days | Standard replenishment planning |
| Long | 180+ days | Strategic planning and long lead time items |
Demand Source
The simulation consumes demand based on the selected forecast:| Option | Description |
|---|---|
| Selected Model | Uses the currently active forecast model |
| Specific Model | Choose a particular forecast model |
Overstock Configuration
What is Overstock?
Overstock threshold defines when inventory is considered excessive. Excess inventory:- Ties up working capital
- Creates risk of obsolescence
- Increases storage costs
Setting Overstock Thresholds
| Method | Description |
|---|---|
| Days of Cover | Flag as overstock if inventory exceeds X days of demand |
| Multiple of Target | Flag as overstock if inventory exceeds X times the target level |
overstock_qty for each SKU-warehouse pairing each day. When projected inventory exceeds the overstock threshold, it is flagged in charts and alerts.
Pairing Eligibility
Requirements for Simulation
Not every SKU-warehouse combination is simulated. A pairing must meet these prerequisites:| Requirement | Why It’s Needed |
|---|---|
| Replenishment cadence configured | The simulation needs to know when to check for replenishment |
| Safety stock configured | Defines the target minimum inventory level |
| At least one source (supplier capability, transfer route, or production capability) | The simulation needs to know where to order from |
| Demand forecast available | The simulation needs projected consumption data |
Configuration Best Practices
Start Conservative
Start Conservative
Begin with higher safety stocks:
- Learn demand patterns first
- Understand demand variability
- Reduce safety stock gradually as you gain confidence
Segment by Risk
Segment by Risk
Apply different settings based on product characteristics:
- Critical items: higher safety stock, shorter cadence
- Long lead time items: higher safety stock buffer
- Stable demand items: lower safety stock, longer cadence
- New products: higher buffer until demand patterns are established
Align Cadence with Operations
Align Cadence with Operations
Choose cadence that matches your operational reality:
- Match supplier ordering windows
- Align with shipping schedules
- Consider warehouse receiving capacity
Review Regularly
Review Regularly
Update configurations as your business changes:
- New suppliers or changed lead times
- Demand pattern shifts (seasonal changes)
- New warehouses or fulfillment routes
Configuration Impact
How Settings Affect Results
| Configuration | Simulation Impact |
|---|---|
| Higher Safety Stock | Earlier reorder triggers, more inventory on hand |
| Longer Lead Times | Orders must be placed further in advance |
| Shorter Cadence | More frequent, smaller orders |
| Longer Cadence | Less frequent, larger orders |
| Higher MOQ | Larger orders, potentially more overstock |
| More Fulfillment Options | Flexible sourcing recommendations |
| Transfer Source Type | Creates dependencies between warehouses |
Testing Configuration Changes
Before applying configuration changes:- Run simulation with current settings
- Note baseline results (stockout dates, order counts, coverage days)
- Change the configuration
- Run simulation again
- Compare differences and validate the results make sense
Troubleshooting
Pairing Not Appearing in Simulation
Possible causes:- Missing replenishment cadence
- No safety stock configured
- No supplier capability, transfer route, or production capability set up
- No demand forecast available for the SKU
- Check all pairing eligibility requirements above
- Verify the SKU-warehouse pairing has a source configured
- Ensure a demand forecast covers the simulation period
Orders Recommended Too Late
Possible causes:- Lead times not configured or too short
- Safety stock too low
- Missing supplier capabilities
- Verify lead time configuration matches real-world delivery times
- Review safety stock settings — increase if breaches are frequent
- Check supplier setup and ensure capabilities are complete
Too Many Recommendations
Possible causes:- Safety stock too high relative to demand
- Replenishment cadence too short (e.g., daily)
- MOQ too low, generating many small orders
- Review safety stock levels — reduce if inventory is consistently above target
- Lengthen the replenishment cadence (e.g., weekly instead of daily)
- Check MOQ settings with suppliers
Unexpected Dependency Order
Possible causes:- Transfer routes creating unexpected dependencies
- Circular dependencies between warehouses
- Review transfer routes in your warehouse configuration
- Check for cycles in the supply chain (e.g., Warehouse A → B → A)
- Simplify transfer routes if dependencies are overly complex
Next Steps
Running Simulations
Execute simulations with your configuration
Charts
Visualize simulation results
What-If Scenarios
Test scenarios with different parameters
Lead Times
Configure warehouse lead times