Question 1

How many iterations should I run for accurate results?

Accepted Answer

10,000 iterations provide stable results (±1-2%) for most scenarios. For extreme service levels (99.5%+), use 50,000-100,000 iterations because the tail percentile requires more samples. Doubling iterations reduces statistical error by roughly √2.

Question 2

When should I use Poisson instead of Normal distribution for demand?

Accepted Answer

Use Poisson for slow-moving items (average demand < 10 units/day) where demand is discrete and sporadic. Normal distribution works well for fast-moving items (demand > 20/day) where the Central Limit Theorem applies. For intermittent demand (many zero-demand periods), consider compound Poisson or Croston's method.