Supply Chain Lab Multi-Echelon Inventory Lab Home
Inventory & Ordering

Multi-Echelon Inventory

One distribution centre feeding three stores, every echelon on a base-stock policy, simulated over 1,500 days. The question that matters: given a fixed total, where should the stock live - forward in the stores, or pooled at the DC?

How to use it

The network

Demand (per store, daily)

Base-stock levels

Store lead time from DC: 2 days (when the DC has stock - otherwise stores wait). DC lead time from supplier: 5 days, always filled.

Totals

Experiment 1 asks you to hold this total fixed while shifting units between echelons - trade the sliders against each other.

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Lost sales / day
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DC fill rate
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Avg on-hand (units)

Bubble size shows average on-hand at each node; red halo = the share of days that node stocked out.

Store fill rate vs store base stock, at your current DC level. The marked point is your setting; note the flattening - the last units buy almost nothing.

Same total stock, five DC/store splits: service peaks at a balanced split - all-forward loses pooling, all-at-DC starves the shelves.

Try these experiments

  1. Keep the total at 400 and shift units between the sliders - find the split that maximises store fill. Neither extreme wins.
  2. Raise σ to 12: the best split moves toward the DC - pooling is worth more when demand is noisier.
  3. Starve the DC (S=0) with generous stores: fill holds for a while, then collapses as pipelines empty - DC stockouts hit stores with a delay.

About this tool

The concept

In a multi-echelon chain, each tier's service depends on the tier above. Stock at the DC is shared insurance; stock in stores is committed to one market.

How it works

Every node runs a base-stock policy: order yesterday's demand to restore the level. Store orders wait when the DC is out - that delay is how upstream failure propagates.

Winning strategy

Push enough forward to cover lead-time demand, pool the rest upstream. As variability rises, shift the balance toward the pool.