The Financial and Inventory Simulation Model (FINISIM) is a discrete event simulation that rapidly analyzes complex, large-scale inventory and financial systems and the interaction between them. The model tracks supply chain-related financial metrics, such as inventory investment, cash flow, and sales, as well as supply-related metrics such as customer wait time, fill rates, and backorder duration. It enables users to quickly evaluate impacts of changes to financial, procurement, and repair systems’ settings, capturing those systems’ interactions with dynamic demand patterns. Custom event processing means that it takes just a few hours to simulate hundreds of thousands of items’ daily activity over several years. This supports rapid tradeoff and what-if analyses.
Model Your Network
FINISIM can model a network of inventory sites, each with its own operating policies. Sites can have their own forecasting, safety stock, order quantities, as well as different frequencies for updating them.
Advance Planning Possible
In an era of scarce resources, rapid analysis is critical. Inventory planners can use FINISIM to simulate the impact of budget cuts before they occur. Buyers can use the tool to evaluate whether changes in stock policies will decrease or increase wait times for a part, and gauge the financial impacts. Managers can use FINISIM to identify the best methods for reducing procurement workload, and for most efficient use of repair resources. The model simulates the impact of changes before enterprises commit time or money to retooling their existing inventory systems, or initiating new policies for financing inventory.
Robust Forecasting and Inventory Control Implemented
How is FINISIM able to answer such complex questions? LMI has spent nearly 20 years developing and refining the model. The result is a robust tool that incorporates many standard forecasting and inventory control approaches as well as benchmarks to enable rapid comparison of alternative inventory control methods. FINISIM’s standard suite features 16 stocking policies, 20 forecasting models, 10 options for setting safety levels, and six methods for computing order quantity, as well as a flexible set of repair options. For items where traditional forecasting and safety stock approaches do not produce acceptable results, FINISIM enables you to test LMI’s risk-based inventory control model, to gauge potential benefits. LMI’s analysts can also tailor FINISIM to your specifications in order to emulate other methods that you want to evaluate.
Trade-Off Analyses Support Decision-Making
FINISIM helps managers visualize the tradeoffs between customer service, inventory cost, and procurement. For example, managers can use the tool to plot on-hand investment versus wait time and see how the two interact. The user can observe the tradeoffs possible by tuning current operating policies, and observe how those tradeoffs change with a move to a completely different set of policies. FINISIM’s speed enables a rapid but thorough exploration of tradeoff options.
Avoid Assessment Bias
Unlike many simulations, FINISIM lets you stress-test operating policies against historical demand, or randomized historical demands, rather than forcing you to accept theoretical demand probabilities that do not fit your data. FINISIM avoids assessing inventory control models against their assumed demand distributions—a bias that can result in accepting a model that ends up producing bad business outcomes.
Drill down Capability
FINISIM enables the user to drill down to look at individual items that are driving investment, driving buyer workload, or to isolate items requiring customer service improvements. Item-level output data includes numerous metrics for customer service, buy and repair actions, and financial impacts.