A System-Dynamic Based Simulation and Bayesian Optimization for Inventory Management
Abstract
Inventory management is a fundamental challenge in supply chain management. The challenge is compounded when the associated products have unpredictable demands. This study proposes an innovative optimization approach combining system-dynamic Monte-Carlo simulation and Bayesian optimization. The proposed algorithm is tested with a real-life, unpredictable demand dataset to find the optimal stock to meet the business objective. The findings show a considerable improvement in inventory policy. This information is helpful for supply chain analytics decision-making, which increases productivity and profitability. This study further adds sensitivity analysis, considering the variation in demand and expected output in profit percentage. This paper makes a substantial contribution by presenting a simple yet robust approach to addressing the fundamental difficulty of inventory management in a dynamic business environment.
Keywords
Cite
@article{arxiv.2402.10975,
title = {A System-Dynamic Based Simulation and Bayesian Optimization for Inventory Management},
author = {Sarit Maitra},
journal= {arXiv preprint arXiv:2402.10975},
year = {2024}
}