Discrete event simulation to evaluate abc classification for defence inventories

ABC classification is a widely used technique for setting inventory policies for large inventories. Recently a novel cost-based approach, which seeks to minimise holding costs subject to target service levels for each class, has shown a potential for significant cost savings over more traditional approaches. As part of a study to adapt this approach to the particular characteristics of military inventories, a bespoke discrete-event simulation has been developed to validate the predictions of a theoretical model which implements the approach. Because the two models thus use radically different approaches to generate predictions which can be directly compared with each other, developing the simulation logic has provided an illuminating opportunity to evaluate the assumptions underlying the theoretical model. This informs a comparative analysis of the service levels and holding costs predicted by the two models. Various software design measures taken to optimise runtime performance are also described.