Retail stock allocation with probabilistic forecasts - Lecture 6.1


00:00 Introduction
02:53 Decisions vs Artifacts
10:07 Experimental optimization
13:51 The story so far
17:01 Today’s decisions
19:36 The manifesto of the quantitative supply chain
21:01 The retail stock allocation problem
24:49 Economic forces on the store SKU
29:35 Reifying the futures
32:41 Reifying the options - 1/3
38:25 Reifying the options - 2/3
43:02 Reifying the options - 3/3
44:44 Stock reward function - 1/2
51:41 Stock reward function - 2/2
56:19 Prioritized stock allocations - 1/4
59:59 Prioritized stock allocations - 2/4
01:03:39 Prioritized stock allocations - 3/4
01:06:34 Prioritized stock allocations - 4/4
01:12:58 Smoothing the warehouse flow - 1/2
01:16:48 Smoothing the warehouse flow - 2/2
01:22:12 Action reward function
01:25:02 The real world is messy
01:27:38 Conclusion
01:30:00 6.1 Retail stock allocations with prob. forecasts - Questions ?

Description

Supply chain decisions require risk-adjusted economic assessments. Converting probabilistic forecasts into economic assessments is nontrivial and require dedicated tooling. However, the resulting economic prioritization, illustrated by stock allocations, proves itself more powerful than traditional techniques. We start with the retail stock allocation challenge. In a 2-echelon network that includes both a distribution center (DC) and multiple stores, we need to decide how to allocate the stock of the DC to the stores, knowing that all stores compete for the same stock.