Example of Simulation of Changes to Inventory Rebalancing Recommendations

Consider an example in which you want to simulate the changes to inventory rebalancing after you consolidate two planned orders from a source destination to a destination location for an item.

In this example, your cluster has five locations: M1, M2, M3, M4, and M5.

This table depicts the excess inventory and inventory shortages before inventory rebalancing for your replenishment plan:

Inventory	M1	M2	M3	M4	M5
Excess inventory	12	6	0	0	0
Inventory shortage	0	0	9	1	7

This table depicts the initial results after inventory rebalancing for your replenishment plan:

	Planned Orders	Inventory	M1	M2	M3	M4	M5
1	M2 to M3: 6 M1 to M3: 3	Excess inventory	9	0	0	0	0
		Inventory shortage	0	0	0	1	7
2	M1 to M5: 7	Excess inventory	2	0	0	0	0
		Inventory shortage	0	0	0	1	0
3	M1 to M4: 1	Excess inventory	1	0	0	0	0
		Inventory shortage	0	0	0	0	0

First, two planned orders are created, one for six units from M2 to M3 and the other for three units from M1 to M3. The excess inventory is zero units for M2 and nine units for M1. The inventory shortage is zero units for M3. In the cluster, M3 is picked up because it has the largest inventory shortage, and M2 is picked up because it has the shortest transfer lead time.

Second, one planned order is created for seven units from M1 to M5. The excess inventory is two units for M1. The inventory shortage is zero units for M5. In the cluster, M5 is picked up because it has the second largest inventory shortage.

Third, one planned order is created for one unit from M1 to M4. The excess inventory is one unit for M1. The inventory shortage is zero units for M4.

M1 has an initial excess of 12 units and can fully meet the shortage of nine units at M3. Therefore, you may want to consolidate the number of shipments arriving at M3 to one shipment from M1 instead of two partial shipments from M1 and M2 and simulate the results of your change to the inventory rebalancing for the other locations in the cluster.

Assume that you've changed the quantity of the shipment from M1 to M3 from three to nine units and firmed the planned order. This table depicts the results of consolidating the planned orders that are received by M3:

Planned Orders	Inventory	M1	M2	M3	M4	M5
M1 to M3: 9	Excess inventory	3	6	0	0	0
	Inventory shortage	0	0	0	1	7

One planned order for 9 units is created from M1 to M3. The excess inventory is three units for M1.

This table depicts the simulation of the results of your change on the inventory rebalancing for the remaining locations of the cluster:

	Planned Orders	Inventory	M1	M2	M3	M4	M5
1	M2 to M5: 6 M1 to M5: 1	Excess inventory	2	0	0	0	0
		Inventory shortage	0	0	0	1	0
2	M1 to M4:1	Excess inventory	1	0	0	0	0
		Inventory shortage	0	0	0	0	0

The excess inventory and inventory shortage are recalculated for M1 and M3. No planned orders are created from M1 to M3.

Then, inventory rebalancing is performed for the remaining locations in the cluster. First, two planned orders are created, one for six units from M2 to M5 and the other for one unit from M1 to M5. The excess inventory is zero units for M2 and two units for M1. The inventory shortage is zero units for M5. In the cluster, M5 is picked up because it has the largest inventory shortage.

Second, one planned order is created for one unit from M1 to M4. The excess inventory at M1 is one unit. The inventory shortage at M4 is zero.

If you're satisfied with the simulation results, you can manually release the modified planned order (M1 to M3) and recommended planned orders.