What-if simulations: computing inventory decisions in advance.

Which questions does the simulation answer?

The two classics: by how many euros is inventory expected to rise if you raise the desired service level? And the reverse: how much does service level drop if you shrink stock by a certain amount? The simulation computes the effect article by article, before anyone touches a parameter. Decisions about target service levels thus become arithmetic instead of matters of belief.

The service-level curve.

The relationship between service level and the necessary inventory can be shown as a curve: it rises exponentially, the last percentage points of service level cost the most. So you see at a glance which target service level leads to which stock value. Why that is and how the trade-off feels is shown by the article on service level with an interactive simulator.

At class level instead of globally.

A global desired service level would be the one-size-fits-all approach. Instead, EazyStock combines the ABC and XYZ analysis in a matrix and distributes the target service levels automatically across the classes so that the global target is reached with minimal total stock. Individual classes can be overridden manually, e.g. for service-level agreements with customers. And because articles move, the system checks daily whether an article has changed class.

Simulations are also a negotiation tool: if sales demands 99% service level, put the simulated extra cost next to it. Usually the demand then becomes a differentiated target per product group.