Supply Chain Glossary
Network Design, Inventory and Simulation Terms
Short definitions of the terms used across the supply chain guides and the Networks demos. Each one links to the guide or demo that goes into it.
Terms A to Z
Base case
The version of a model that reproduces a known period of history. Every scenario is a change to it, so the difference between runs comes from the change. How to know your supply chain model is right →
Brownfield network design
Network design that starts from the sites you already have and chooses which to keep. Some sites are pinned open, and an engine decides which optional sites to close to reach a target count. Greenfield, brownfield and footprint →
Center of gravity
The point on a map that balances your demand, with each customer weighted by how much it buys. The quickest first answer to where a single warehouse should go. Center of gravity analysis →
Cycle stock
Inventory that exists because product is made or ordered in batches. It rises when a batch arrives and draws down until the next one. Postponement case study →
Discrete rate simulation
A simulation that models flow as rates between machines and buffers, and does work only when a rate changes. It suits high-speed and bulk-flow production lines. What is discrete rate simulation? →
Discrete-event simulation
A simulation that moves from one event to the next (an order arrives, a shipment leaves, stock crosses its order point) and updates the network at each one. How supply chain simulation works →
Echelon
A tier of a supply chain, such as plant, central DC and regional DC. Multi-echelon inventory planning decides stock at every tier together rather than one site at a time. Safety stock simulation →
Elbow
The bend in a curve of cost or distance against the number of facilities, where each added facility starts to buy much less than the one before. How many distribution centers? →
Fill rate
The share of demand met from stock on hand, without a backorder or a lost sale. It can be counted by units, by order lines or by whole orders, and the three give different numbers. Safety stock simulation →
Footprint rationalization
Consolidating a network that grew over time: starting from today’s DCs and deciding which could close and where their customers would be served from. Footprint rationalization demo →
Greenfield network design
Placing facilities from scratch where demand clusters, ignoring the current footprint. A fast first pass before cost and capacity come in. Greenfield network design →
Holdout period
A stretch of history kept out of model building and used only to test the finished model. Matching it is stronger evidence than matching the period you tuned on. How to know your supply chain model is right →
Inventory position
Stock on hand plus stock already on order, minus backorders. Reorder decisions look at inventory position, not just what’s on the shelf. How supply chain simulation works →
Landed cost
The full cost of getting a unit to where it’s sold: purchase or production cost, freight, duty and handling. Tariff network redesign →
Lead time
The time from placing an order to having the goods available. It varies from order to order, and the long tail matters more than the average. How to know your supply chain model is right →
Network optimization
Solving for the best set of facilities, sourcing and flows under a model’s costs and constraints, usually as a mixed-integer program. It works from averaged demand. Supply chain optimization vs simulation →
Order point
The inventory position at which a new replenishment order is placed. Also called the reorder point. How supply chain simulation works →
Playing field
The scope a model covers, from one machine to a whole network, where you try a change before making it. ReliaSim uses the term instead of “digital twin” because its models aren’t live-connected. Digital twin vs simulation →
Postponement
Delaying the final form of a product, such as packing or labeling, until it’s closer to demand, so less stock is committed to the wrong item or the wrong place. Postponement case study →
(s,S) policy
A reorder rule: when inventory position falls to s or below, order enough to bring it back up to S. The order size varies with how far below s the position fell. How supply chain simulation works →
Safety stock
Stock held above expected demand over the lead time, to cover variation in demand and supply. Safety stock simulation →
Square root law
A rule of thumb that total safety stock grows with the square root of the number of stocking locations. It rests on assumptions most real networks break. How many distribution centers? →
Where to go next
Start with what supply chain simulation is, or try the free network demos to see most of these terms in action.
Line and reliability terms
Terms from the plant side, such as constraint, buffer, interrupt, MTBF and OEE, are covered in the production line guides and in MTBF vs MTTR.