Probabilistic Forecasts & Sequential Decision-Making (with Warren Powell) - Ep 163

Full transcript available: www.lokad.com/...
Summary
In a recent LokadTV interview, Conor Doherty, Joannes Vermorel, and guest Warren Powell discussed probabilistic forecasts and decision making in supply chains. Warren Powell, a retired Princeton professor and Chief Innovation Officer at Optimal Dynamics, shared his career journey and insights on planning under uncertainty. Joannes Vermorel, Lokad's CEO, discussed his transition from deterministic methods to probabilistic forecasting, criticizing academia's lack of real-world application. Both agreed on the superiority of probabilistic forecasting, despite its complexity and businesses' struggle to apply it. The conversation highlighted the need for a broader perspective and a unified approach to dealing with uncertainty in decision-making.
00:00:00: Introduction of guests
00:01:27: Warren's role at Optimal Dynamics and book
00:03:06: Challenges and forecasting in truckload trucking
00:04:31: Warren's paper and understanding of uncertainty
00:06:41: Joannes' journey and success in software
00:08:12: Embracing uncertainty and academic perspective on supply chain
00:09:39: Sequential decisions and difficulty of industry collaboration
00:11:13: Probabilistic vs deterministic forecasting
00:13:27: Metrics for probabilistic forecasts and understanding difficulties
00:15:28: Importance of forecast coverage and sharp forecasts
00:17:09: Lokad's journey with probabilistic forecasts and challenges
00:19:15: Difficulty of uncertainty problems and lack of unified community
00:21:05: Decisions and uncertainty in math programming
00:23:03: Diverse lab experiences and ADP book applications
00:25:07: Need for toolbox in supply chain and transition to new approach
00:27:35: Deterministic optimization and cost function approximation
00:29:57: Google Maps as a look ahead example
00:31:51: Stochastic look ahead and value function approximations
00:33:21: Joannes' perspective on decision-making and problem statement
00:35:29: Importance of correct state, transition function, and cost function
00:37:28: Considering problem dimensionality and large-scale problems
00:39:15: Fragility of solutions and network of supermarkets comparison
00:41:16: Approach to problem-solving and writing a supply chain analytics book
00:43:44: Simplicity in model design and different types of uncertainty
00:45:13: Importance of swift iteration and real-world constraints
00:47:51: Importance of computational tractability and development of Graphics tool
00:50:27: Role of instrumentation in optimization and industry challenges
00:53:11: Working with carriers and critique of academic approach
00:55:23: Joannes' journey from forecasting to decision-making
00:58:28: Difficulty of data access and dealing with future forecasting
01:00:32: Importance of considering major disruptions and accepting pessimistic models
01:02:45: Variability in supply chain and fashion industry
01:04:43: Renewing products annually and forecasting new products
01:06:27: Importance of modeling uncertainty and critique of corporate rules
01:08:16: Warren's approach to stochastic optimization and managing inventory
01:09:56: Planning for contingencies and decision-making under uncertainty
01:11:39: Importance of real-time dispatching in trucking and right load selection
01:13:27: Challenges in decision making under uncertainty and issues with educated individuals
01:15:45: Excel's limitations in dealing with uncertainty and CEOs' understanding
01:19:30: Limitations of supply chain books and importance of user-friendly tools
01:21:46: Lokad's educational initiatives and creating relevant data sets
01:25:01: Three essential questions for problem-solving and developing decision categories
01:27:48: Non-quantitative MBA's challenge and companies burying decisions under workflows
01:30:26: Price of simplicity and sequential learning as a decision-making tool
01:32:33: Teaching the concept of aiming higher and challenges of rigid policies
01:34:34: Difficulty of comprehending exploration concept and importance of active learning
01:37:41: Differences between trucking and supply chain and size of truckload business
01:40:04: Book's title, purpose, teaching style, and five elements of modeling
01:42:39: Praise for Optimal Dynamics, Lokad, and sharing academic ideas
01:43:22: Closing remarks and thanks
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Check out our website: www.lokad.com/
Follow us on LinkedIn: / lokad
Read our blog: blog.lokad.com/
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[@joshuabradshaw1647]

Wow, inspiring, I cannot wait to read some of his books now (I’ll start with the tiny URL) and see how I can apply it to my company’s problems.