Implementing Reinforcement Learning Algorithms in Retail Supply Chains with OpenAI Gym Toolkit

Abstract

From cutting costs to improving customer experience, forecasting is the crux of retail supply chain management (SCM) and the key to better supply chain performance. Several retailers are using AI/ML models to gather datasets and provide forecast guidance in applications such as Cognitive Demand Forecasting, Product End-of-Life, Forecasting, and Demand Integrated Product Flow. Early work in these areas looked at classical algorithms to improve on a gamut of challenges such as network flow and graphs. But the recent disruptions have made it critical for supply chains to have the resiliency to handle unexpected events. The biggest challenge lies in matching supply with demand. Reinforcement Learning (RL) with its ability to train systems to respond to unforeseen environments, is being increasingly adopted in SCM to improve forecast accuracy, solve supply chain optimization challenges, and train systems to respond to unforeseen circumstances. Companies like UPS and Amazon have developed RL algorithms to define winning AI strategies and keep up with rising consumer delivery expectations. While there are many ways to build RL algorithms for supply chain use cases, the OpenAI Gym toolkit is becoming the preferred choice because of the robust framework for event-driven simulations. This white paper explores the application of RL in supply chain forecasting and describes how to build suitable RL models and algorithms by using the OpenAI Gym toolkit.