Plan Inventory Replenishment as an MDP for an E-Commerce AI Startup
Overview
What this challenge is about.
You receive 18 months of daily demand for 50 representative SKUs at one warehouse plus lead-time and unit-cost data. For one SKU at a time, formulate an MDP with state = (on-hand inventory, on-order pipeline), actions = order quantities from a small discrete set, stochastic demand, and a reward that nets revenue, holding cost, and stockout cost. Solve with value iteration and roll out the policy in a simulation against the historical demand. Benchmark on stockout rate, average holding cost, and total profit versus the current heuristic.
The Brief
What you'll do, and what you'll demonstrate.
Formulate and solve a single-SKU replenishment MDP and beat the current reorder-point heuristic in simulation across the 50 SKUs.
Earning criteria — what you'll demonstrate
- Translate a business problem into a well-defined MDP
- Implement value iteration and verify convergence properties
- Build a fair simulation harness on historical demand
- Communicate the limits of the model (single SKU, stationary demand)
Program Fit
Where this fits in your program.
Sharpens the same skills your degree expects you to demonstrate.
Skills
Skills you'll demonstrate.
Each one shows up on your verified credential.
Careers
Roles this prepares you for.
Real titles. Real skill bridges. Pick the one closest to your trajectory.
Applied AI Scientist
Formulating a business problem as an MDP and benchmarking against the incumbent heuristic is the textbook first quarter for an applied AI scientist on an optimization team.
This challenge sharpens
- mdp-modeling
- value-iteration
- policy-evaluation
ML Researcher
Clean MDP formulations are the entry point for any RL or sequential-decision research role.
This challenge sharpens
- mdp-modeling
- dynamic-programming
- policy-evaluation
Data Scientist
Simulation-based policy comparison on historical data is core operations-research-flavored data science work.
This challenge sharpens
- simulation
- policy-evaluation
- python