Logistics Management Institute (lmi)

Logistics Management Institute

Tovey C Bachman

John D Westbrook

Karl Kruse

Carol A Dezwarte

Joel Lepak

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.

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

A computer-readable medium executing a method of determining desired stock levels is provided. Demand histories, including peak demands, for each of a plurality of items are determined. The items are ranked, based on unit price, to produce a ranked list, which is divided into price percentiles. Multipliers are assigned to each of the items, based on the respective price percentiles, and stock levels are determined for each of the items by multiplying the peak demand of each item and the respective assigned multiplier. Order quantities are assigned to each of the items based on price percentiles. A service level metric and a resource metric are determined based on the stock levels and the respective order quantities, and the service level metric and resource metric are compared with a desired service level range and a desired resource metric range to determine whether the determined stock levels are the desired stock levels.

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McLean, VA, United States of America

Tovey C Bachman