BRIDGEi2i helps a Fortune 100 networking giant to plan their inventory flexibility requirement through discrete choice simulation models and non-linear optimization techniques.

1. Customer Case Study
BRIDGEi2i helps a Fortune 100 networking giant to plan their inventory flexibility requirement
through discrete choice simulation models and non-linear optimization techniques.
Business Challenge
The client is Fortune 100 technology giant primarily operating in the networking space. The company invests in
R&D and design, but the manufacturing is outsourced to partners in China and other geographies. Manufacturing
and shipping lead times are large and careful inventory planning is required to optimize supply chain costs. The
company has a rigorous forecasting & consensus planning process, yet forecast accuracy is sometimes low, leading
to missing orders and losing sales. The company has also a flexibility arrangement with its partners, which is
communicated as much as 6 months in advance over a “Flexibility” requirement for product shipments which is over
and top of forecasts. The main Business challenge was to optimize and rationalize this “Flexibility” arrangement with
partners for which the company bears significant inventory holding & order costs, at the same time minimizing the
lost sales on account of non-availability of products.
BRIDGEi2i Solution
BRIDGEi2i engaged in a data driven consulting engagement to build a flexibility calculation tool that learns from
historical forecasts and actual bookings (the forecast errors). It takes into account the historical error distributions,
the lost sales cost, the inventory holding and ordering costs, the lead time errors etc. and builds a simulation model
based on this information. By simulating various scenarios of expected demand and available forecasts, its then
uses a complex non-linear optimization technique to find that level of “Flexibility” at which the total cost would be
minimized based on over 5000 simulation patterns. This complete and complex system is applied to around 1500
products that contribute to more than 50% of revenue for the company. While the solution developed in SAS
results are deployed via an Excel based tool that allows demand planners to run “What-If” scenarios and provide a
recommended flexibility requirement to their partners.
Product Grouping
In order to minimize volatility of individual’s products,
products are segmented based on their historical error
patterns and shipment quantity using a two stage density
clustering technique. For products with sparse data, suitable
proxies were identified and their data was used for the
analysis
Distribution Fitting and Demand Simulation
Forecast errors for 24 month histories were used for each
group and a suitable statistical distribution was fitted to
identify their pattern. Choices of multiple continuous
distributions were used and the best distribution was chosen.
The chosen distribution was then sampled for over 5000
cases, each one representing a possible future demand
scenario.
For more details contact us: enquiries@bridgei2i.com
© BRIDGEi2i Analytics Solutions
Information
Insight
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2. Customer Case Study
Non Linear Programming, Optimization & Scenario Generation
Based on the simulated demand scenarios, a system
was created to calculate service level, inventory cost,
lost sales cost and ordering cost for every scenario.
Inventory levels have a non- linear relationship with
costs and service level and were optimized to obtain
the right level at which the total cost would be
minimized, given the constraints that a minimum
service level of demand would be met with.
Excel based Visualization Tool for solution deployment
An Excel based tool was developed using VBA for
deployment of the solution and distribution to
demand planners. The Visualization included product
grouping analysis, scenario analysis and optimization
visualization.
About BRIDGEi2i
BRIDGEi2i is an analytics solutions company partnering with businesses globally, helping them achieve accelerated
outcome harnessing the power of data. BRIDGEi2i helps companies to BRIDGE the gap between INFORMATION,
INSIGHT and IMPACT in their journey to institutionalize data driven decisions across the enterprise. To know more
visit http://www.bridgei2i.com
For more details contact us: enquiries@bridgei2i.com
© BRIDGEi2i Analytics Solutions
Information
Insight
Impact