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Leer Challenge: Forecast and Replenish | Inventory Management and Demand Forecasting
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Python for Supply Chain
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bookChallenge: Forecast and Replenish

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Before you tackle a full challenge, it's important to recap the key concepts you'll need. Moving average forecasting is a simple but powerful technique where you predict future demand by averaging actual demand over a fixed window of previous days. This helps smooth out fluctuations and provides a reasonable short-term forecast. In inventory simulation, you track how stock levels change over time, considering daily demand and replenishment rules. A common approach is to set a reorder point: when inventory drops below this threshold, you replenish up to a desired level. By combining forecasting and inventory simulation, you can better anticipate stockouts and optimize replenishment decisions.

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# Example list of daily demand values (30 days) daily_demand = [ 20, 22, 19, 23, 25, 18, 20, 24, 21, 19, 22, 20, 23, 21, 18, 20, 25, 22, 19, 21, 24, 23, 22, 20, 18, 19, 21, 23, 20, 22 ] # Initial inventory parameters initial_stock = 50 replenishment_quantity = 40 window_size = 3 # For moving average forecast # Reorder point will be calculated in the challenge
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For this challenge, you will use the provided daily demand list and inventory parameters to build a complete forecasting and inventory management workflow. Start by implementing a moving average forecast using the specified window size. For each day after the initial window, calculate the average of the preceding days to produce the forecasted demand. Next, simulate inventory levels: begin with the initial stock, subtract daily demand, and whenever the inventory falls below the reorder point, replenish by the fixed quantity. The reorder point should be calculated as the average demand over the moving average window, multiplied by the window size. Throughout the 30-day period, keep track of both actual and forecasted demand, inventory levels, and any days when a stockout (inventory dropping below zero) occurs. Finally, visualize the actual and forecasted demand as well as the inventory levels on a line plot, and print a summary listing all days when stockouts happened.

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Implement the moving average forecast, inventory simulation, visualization, and summary for the provided daily demand data.

  • Calculate the moving average forecast for each day after the initial window, using the average of the previous days within the window.
  • Compute the reorder point as the average demand over the moving average window, multiplied by the window size.
  • Simulate inventory levels: subtract daily demand from the current stock, replenish by the fixed quantity whenever inventory falls below the reorder point, and track any days when inventory drops below zero.
  • Visualize actual demand, forecasted demand, and inventory levels on a single line plot.
  • Print a summary that lists all days when stockouts occurred.

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