Method and computer system for setting inventory control levels from demand inter-arrival time, demand size statistics

US8600843B2 · kind B2 · utility

Assignee

• Logistics Management Institute (LMI) · US

Inventors

• Tovey C. Bachman · McLean, US
• Karl Kruse · Akron, US
• Joel Lepak · Arlington, US
• John D. Westbrook · Reston, US

Key dates

• Filing date: Sep 19, 2011
• Grant date: Dec 3, 2013
• Expiry date: Mar 12, 2032

Classification

• Technology area (CPC G): Physics
• CPC primary: G06Q10/087
• WIPO field: IT methods for management
• WIPO sector: Electrical engineering

Abstract

A method or a machine determines minimum (s) and maximum (S) inventory control levels (s, S) for inventory items based upon a demand history of the inventory items, such as demand inter-arrival times (IA) and demand requisition sizes (RS). An expected cost is computed including two or more inventory item cost components of expected cost of ordering, expected cost of carrying inventory, or expected cost of outstanding backorders for the inventory control levels (s, S), directly from frequency statistics of different demand IA and demand RS on an inventory item basis. An optimal inventory control level (s, S) of an inventory item is searched that minimizes the cost of ordering, carrying inventory, and/or backorders, based upon the generated expected cost.