When marketplaces like Rappi encounter limited supply relative to customer demand, they may need to increase ETAs or implement coverage reductions that result in “lost demand.” However, measuring lost-demand is challenging. In this post, Paola Neira discusses how Rappi tried to evaluate lost demand, including through regression analysis and experimentation. When these methods failed, the company adopted a simulation tool, wherein policies are modeled as stochastic processes. SimOn enables the Rappi team to evaluate different levers in the context of different demand scenarios.