Phase 1. Create and Define Inventory and Sourcing Policies

We shall start with obtaining the data that will serve as the basis for our experiment. Since Simulation experiment requires optimized data to simulate the delivery process and exclude every possible supply chain drawback, you may either provide your own optimized data or you can instantly import the scenario containing the Network Optimization experiment results. Either way, you should have a supply chain model containing the following parameters: 

The aim of the Simulation experiment is to model the actual products delivery on the GIS map with detailed statistics generated real-time. It is used as well for what-if scenarios to see how the changes you make affect the outcome.

After receiving the first simulation results, you can run the simulation experiment to test different what-if scenarios in search for the best balance between the inventory volume and service level quality.

In this phase we will create and define sourcing and inventory policies.

Note: If you choose to work with the scenario containing NO results, the Sourcing and Inventory tables will already contain all the required records, as a result, you will only have to modify them. This tutorial is based on the imported scenario with data derived from the NO experiment results.
Prior to creating the policies, we will create two groups, which will contain distribution centers and suppliers. This step will simplify the process of defining inventory and sourcing policies as we will define them for the whole group, rather than for each distribution center individually.

Let us start with creating a group for distribution centers.

Create a group of DCs

  1. Navigate to the Groups table. You will see that it already contains a number of groups.
    Judging from the names of the groups we can see that part of them was created as the result of the GFA experiment and the other part was created by us while completing the Network Optimization tutorial.

  2. Click Add above the table to create a new group. A new table record named Group 1 will be created.

  3. Click the Group 1 cell and type in DCs to specify the name of the group.

We have created and renamed a new group. Now we need to define the content of the group. We know that this group will contain distribution centers. The DCs we need can be defined in the Sites column of this table. 

Define DCs for the group
  1. Double-click the DCs row cell in the Sites column. A dialog box will open containing all the available DCs to choose from.

  1. Click the toggle buttons in the Included column referring to the Hazleton DC, Vicksburg DC and Elko DC.

  2. Click OK to close the dialog box and apply the changes.

Now we can move on to define sourcing and inventory policies.

First, we will define sourcing policy to organize the product shipping process from the source to the delivery destinations. 

Create a sourcing policy

  1. Navigate to the Sourcing table. It already contains a lot of policies, which were created automatically based on the Product Flows table records (those records were expanded on converting the NO scenario type to Sim scenario type). The Sources column contains DCs which will be servicing customers that are defined in the Delivery Destination groups. The content of the groups can be seen in the Groups table. In other words, the sourcing policy is already created and defined for customers and DCs. 

    We will now substitute the existing customer policies with 1 record. In such a way we will end up having just two policies: one for DCs and one for customers.

  2. Click Add to create a new policy. New table record will be created.

After creating the new sourcing policy we need to define its parameters by specifying the product we will be shipping and its source. We will leave the set by default delivery destination as it, since it already includes all the scenario's customers.
  1. Specify  PS4 in the two last Product column cells by Ctrl+clicking them and press Spacebar to open the dialog box. Select PS4 in the drop-down list and click OK to close the dialog box.

The next step is to specify the sourcing policy in the Type column, or in other words the origin of the product. Our customers will purchase from the closest fixed source. As you can see, this type is selected by default. Move on to specifying the source of the product.
  1. Double-click the cell in the Sources column and double-click DCs to select it from the drop-down list of available sources. The content of the cell will change.

  2. To close the drop-down list, click any empty spot beside the Sourcing table.


Let us make the Port of LA service only the sites contained in the DCs group, rather than all sites of the current scenario.
  1. Double-click the (All sites) cell in the Delivery Destination column and select DCs. In such a way we create a clear product flow: from Port of LA to DCs, from DCs to All customers.

  2. With the final step we will set the inclusion type for all the initially offered policies to Exclude since we no longer need to consider them.

We have finally set up the parameters of the sourcing policy. Let's see the connections between the suppliers and the distribution centers.

Explore the connections
  1. Click the Show Sourcing Paths icon in the GIS map toolbar. It might take a while, since ALX is downloading the routes online.

  2. Zoom into the Port of LA supplier on the left. As you can see there are three routes to the supplier now.

Now, let us define the inventory policies for our supply chain facilities.

Create inventory policy

  1. Navigate to the Inventory table. It already contains policies, which were created within the previous tutorials. We will not be using them since we have created DCs group that contains all the warehouses we need.
  2. Drag the horizontal scrolling bar at the bottom of the table to the right to reach the end of the table. You will see that the inclusion type for all the policies is set to Include. Since we will define a new policy containing a group of DCs, all other policies must be excluded.
  3. Click the first cell in the Inclusion Type column to select the policy, then Shift+click the last cell in this column to select all the policies.
  4. Press Spacebar to open a dialog box. 
  5. Set the policy type to Exclude and click OK. All the previously created policies will be now excluded from the supply chain optimization.
    Note: Once you have marked the policies as “Excluded, the table records will turn gray.
  6. Now click the Add button above the table. New policy will be created.

Now we need to specify the parameters of the inventory policy.

Specify inventory policy parameters

  1. Double-click the (All sites) cell in the Facility column and select DCs from the drop-down list of available facilities.

  2. Double-click the cell in the Product column and select PS4 from the drop-down list of available products.

Distribution centers will purchase Sony consoles using a min-max inventory policy, which allows products to be ordered when the inventory level falls below a fixed replenishment point.

  1. Double-click the Unlimited inventory cell in the Policy type column and select the Min-max policy from the drop-down list of available policies.

  1. Click the Policy parameters cell. A dialog box will open, prompting you to specify the Min and Max policy values.
  2. Set the Min value to 300, then set the Max value to 3000.

We need to define the initial stock, or the number of consoles that we have at the beginning of the simulation.

  1. Click the cell in the Initial stock, pieces column and type in 1000. This will correspond to 1000 product items (PS4 consoles).
The Inventory table should look like this:

That is it. We have defined the sourcing and inventory policies. Phase 1 of this tutorial is completed. It was the last step on our way to setting up the Simulation experiment

Click the link below to proceed to Phase 2.


  Simulation experiment TutorialPhase 2. Configure and run the Simulation experiment