Question

Comment on the following statement: "Inventory planning models are useless because the model assumptions do not always fit real world situations."

Answer 1

Once a solution has been obtained two things need to be done before one even considers developing a final policy or course of action for implementation. The first is to verify that the solution itself makes sense. Oftentimes, this is not the case and the most common reason is that the model used was not accurate or did not capture some major issue. The process of ensuring that the model is an accurate representation of the system is called validation and this is something that (whenever possible) should be done before actual solution. However, it is sometimes necessary to solve the model to discover inaccuracies in it. A typical error that might be discovered at this stage is that some important constraint was ignored in the model formulation - this will lead to a solution that is clearly recognized as being infeasible and the analyst must then go back and modify the model and re-solve it. This cycle continues until one is sure that the results are sensible and come from a valid system representation.