What is an inventory level simulator?
This simulator models a stock of goods that is used up day by day and topped up in batches. You choose how fast demand eats into the stock, when a new order is triggered, how big each order is and how long it takes to arrive, and the model draws the resulting 60-day inventory curve.
It is the classic (r, Q) inventory policy in miniature: order a fixed quantity Q whenever the stock falls to the reorder point r, then wait out the lead time L for the delivery to land.
Why tune it?
Inventory is a trade-off. Hold too little and you run out and lose sales; hold too much and cash sits on a shelf. By moving one slider at a time you can see exactly how demand, reorder point, order size and lead time pull the stock level up and down.
The readouts summarise the result: average stock tells you the typical holding, stockout days count the failures and orders placed shows how often you re-order.
1. Demand draws the stock down
Each simulated day the stock level drops by the daily demand d. With no delivery in sight the curve is a straight slope downward, steeper for higher demand.
2. Stock reaches the reorder point
When the level hits the reorder point r, the model places an order of size Q. This is the trigger: r is the line you draw in the sand before you run short.
3. The order arrives after the lead time
The order does not appear at once. It takes L days to arrive, and during that wait the stock keeps falling. When it lands, the whole batch of Q units is added in a single step, so the curve jumps straight up.
4. High demand or a long lead time causes stockouts
If demand is large or the lead time is long, the stock can fall below zero before the delivery arrives. Those shortfall days are shaded red, and each one is a lost sale or an unmet order.
5. Tune the levers to balance the trade-off
A large order size and a high reorder point avoid stockouts but mean more stock on hand. A small order and a low reorder point cut holding but risk running dry. Dragging the sliders lets you find the balance and watch the readouts move.
What is the reorder point r?
The reorder point is the stock level that triggers a new order. As soon as the inventory falls to r, the model places an order of size Q. A higher r means you order sooner and hold more safety stock.
What does the order size Q change?
Q is how many units arrive in each delivery. A large Q means fewer, bigger deliveries that lift the stock higher; a small Q means more frequent deliveries and a lower average level.
Why does the lead time L matter?
The lead time is how many days pass between placing an order and receiving it. During that gap the stock keeps falling with demand, so a longer lead time makes stockouts more likely.
Why can the stock level go below zero?
A negative level means demand could not be met that day, a stockout. The red shaded area below the zero line shows the days when the model ran short before the next delivery arrived.
How is the average stock worked out?
The simulator adds up the stock level on every one of the 60 days and divides by the number of days. It is a simple average, not a weighted or time-adjusted figure.
Is this how real inventory planning works?
Only in outline. Real planners deal with variable demand, partial deliveries, supplier reliability and holding costs. This model is a teaching simplification of the classic (r, Q) policy, not a planning tool.