Application of Monte Carlo Approach to Determine Stock Out in Public Distribution System (PDS)

Stock outs in public distribution system (PDS) are a common issue causing negative impacts on availability and affordability of essential goods for vulnerable population. Poor supply chain management, government agency coordination, and funding cause PDS stock outs. The public distribution system in Kerala is facing a significant challenge of low warehouse capacity with respect to the corresponding high outlet demand, leading to frequent stock outs and inefficiencies in the stages of the food system. This can cause some consequences that include reduced accesses to essential goods for vulnerable population and decreased trust on government agencies. This study focuses on how Monte Carlo approach to determine stock outs for management decision. The monthly and seasonal simulation is carried out to analyze the probability on stock outs at different time scales. The probability of stock outs can be computed by Monte Carlo simulation, which leads in understanding the risk related with their current inventory and demand rates. Later the t-test is conducted. This helps in enhancing the performance of the PDS by minimizing stock out occurrence, improving customer satisfaction and reducing wastage of resources. By the effective use of Monte Carlo approach in reducing the uncertainty of stock outs, company mangers gained a valuable method in taking decisions useful for the managerial functions.