AI in Supply Chain Optimization for E-Commerce

Reinforcement Learning is proposed as a tool for inventory management in improving inventory management in e-commerce supply chain. As these days, e-commerce is growing, so inventory management is a must of minimizing cost and stockout and increasing satisfaction of customers. For most of the time, the responses of traditional approaches tend to be unable to adjust to the changes in demand and supply. Indeed, RL is a subfield of machine learning with the potential to solve for and learn inventory policies in the form of an optimal solution by interacting with the environment. RL changes reorder points and quantities to real time sales data and condition of the warehouse and therefore does not have to overstock or understock in order to make the inventory control system more agile and cost efficient. We simultaneously demonstrate that, in e-commerce supply chain management, RL can achieve ~ 45% improvement in inventory turns and 20% improvement in service level.