SYSTEM AND METHOD FOR MERCHANDISE INVENTORY MANAGEMENT TO MAXIMIZE GROSS MARGIN

• US 20120253995A1
• Filed: 03/31/2011
• Published: 10/04/2012
• Est. Priority Date: 03/31/2011
• Status: Abandoned Application

• Current Assignee: Wipro Limited
• Original Assignee: Wipro Limited
• Inventors: BOOB, AMIT, Kapoor, Ajesh, Xu, Jiefeng, Arora, Dalbir
• Application Number:
  US13/076,504
• Publication Number:
  US 20120253995A1
• Time in Patent Office: Days
• US Class Current: 705/28
• CPC Class Codes: G06Q 10/067 Enterprise or organisation modelling
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 30/0283 Price estimation or determination

Abstract

A system and method for merchandise inventory management to maximize gross margin is disclosed. In one embodiment, the method includes modeling inventory to maximize gross margin as a function of replenishment of each item in each location based on optimum customer service level. Further, a desired customer service level range is determined. Furthermore, a safety stock level is computed for each customer service level in the determined customer service level range based on supplier information and forecasted future demand. In addition, replenishment quantity is computed for each customer service level in the determined customer service level range based on the computed safety stock level, lost sales information, markdown costs, and economic order quantity. Moreover, gross margin is computed for each customer service level in the determined customer service level range based on the computed replenishment quantity, markdown schedule and other financial information.

Claims

1. A computer-implemented method for merchandise inventory management to maximize gross margin, comprising:

modeling inventory to maximize gross margin as a function of replenishment of merchandise that is based on optimum customer service level.

2. The computer-implemented method of claim 1, wherein modeling the inventory to maximize gross margin as a function of the replenishment of merchandise that is based on the optimum customer service level comprising assumed values for at least inventory carrying costs, lost sales costs and markdown costs.

3. The computer-implemented method of claim 2, wherein modeling the inventory to maximize gross margin as a function of the replenishment of merchandise comprises:

modeling the inventory to maximize gross margin as a function of the replenishment for each item in each location based on the optimum customer service level.

4. The computer-implemented method of claim 3, wherein modeling the inventory to maximize gross margin as a function of the replenishment of each item in each location based on the optimum customer service level, comprises:

determining a desired customer service level range for each item in each location based on parameters selected from the group consisting of sales history, economic order quantity, markdown information and forecasted future demand;

computing a safety stock level for each item in each location for each customer service level in the determined customer service level range using, supplier lead time information, and the forecasted future demand;

computing a replenishment quantity for each item in each location for each customer service level in the determined customer service level range based on the computed safety stock level, the forecast demand pattern, and the economic order quantity; and

computing a gross margin for each item in each location for each customer service level in the determined customer service level range based on the computed replenishment quantity, lost sales, the inventory carrying costs, markdown schedule, and other financial information.

5. The computer-implemented method of claim 4, further comprising:

determining an optimum customer service level for each item in each location based on the computed gross margin for each item in each location in the determined customer service level range to maximize the gross margin.

6. The computer-implemented method of claim 5, further comprising:

determining a required inventory level for each item in each location based on the determined optimum customer service level and demand pattern to maximize the gross margin.

7. The computer-implemented method of claim 6, further comprising:

determining a required inventory level for each item in each location based on the determined optimum customer service level and parameters selected from the group consisting of order lead time, delivery schedule, demand pattern, and the computed replenishment order quantity.

8. A non-transitory computer-readable storage medium for merchandise inventory management to maximize gross margin has instructions that, when executed by a computing device cause the computing device to perform a method comprising:

modeling inventory to maximize gross margin as a function of replenishment of merchandise that is based on optimum customer service level.

9. The non-transitory computer-readable storage medium of claim 8, wherein modeling the inventory to maximize gross margin as a function of the replenishment of merchandise that is based on the optimum customer service level comprising assumed values for at least inventory carrying costs, lost sales costs and markdown costs.

10. The non-transitory computer-readable storage medium of claim 9, wherein modeling the inventory to maximize gross margin as a function of the replenishment of merchandise comprises:

modeling the inventory to maximize gross margin as a function of the replenishment for each item in each location based on the optimum customer service level.

11. The non-transitory computer-readable storage medium of claim 10, wherein modeling the inventory to maximize gross margin as a function of the replenishment of each item in each location based on the optimum customer service level, comprises:

determining a desired customer service level range for each item in each location based on parameters selected from the group consisting of sales history, economic order quantity, markdown information and forecasted future demand;

computing a safety stock level for each item in each location for each customer service level in the determined customer service level range using supplier lead time information, and the forecasted future demand;

computing a replenishment quantity for each item in each location for each customer service level in the determined customer service level range based on the computed safety stock level, the forecast demand pattern, and the economic order quantity; and

computing a gross margin for each item in each location for each customer service level in the determined customer service level range based on the computed replenishment quantity, lost sales, the inventory carrying costs, markdown schedule, and other financial information.

12. The non-transitory computer-readable storage medium of claim 11, further comprising:

determining an optimum customer service level for each item in each location based on the computed gross margin for each item in each location in the determined customer service level range to maximize the gross margin.

13. The non-transitory computer-readable storage medium of claim 12, further comprising:

determining a required inventory level for each item in each location based on the determined optimum customer service level and demand pattern to maximize the gross margin.

14. The non-transitory computer-readable storage medium of claim 13, further comprising:

determining a required inventory level for each item in each location based on the determined optimum customer service level and parameters selected from the group consisting of order lead time, delivery schedule, demand pattern, and the computed replenishment order quantity.

15. A system for merchandise inventory management system to maximize gross margin, comprising:

a processor; and

memory coupled to the processor, wherein the memory includes an inventory management module having instructions to;

model inventory to maximize gross margin as a function of replenishment of merchandise that is based on optimum customer service level.

16. The system of claim 15, wherein the inventory management module further having instruction to:

model the inventory to maximize gross margin as a function of the replenishment of merchandise that is based on the optimum customer service level comprising assumed values for at least inventory carrying costs, lost sales costs and markdown costs.

17. The system of claim 16, wherein the inventory management module further having instructions to:

model the inventory to maximize gross margin as a function of the replenishment for each item in each location based on the optimum customer service level.

18. The system of claim 17, wherein the inventory management module further having instructions to:

determine a desired customer service level range for each item in each location based on parameters selected from the group consisting of sales history, economic order quantity, markdown information and forecasted future demand;

compute a safety stock level for each item in each location for each customer service level in the determined customer service level range using supplier lead time information and the forecasted future demand;

compute a replenishment quantity for each item in each location for each customer service level in the determined customer service level range based on the computed safety stock level, the forecast demand pattern and the economic order quantity; and

compute a gross margin for each item in each location for each customer service level in the determined customer service level range based on the computed replenishment quantity, lost sales, the inventory carrying costs, markdown schedule, and other financial information.

19. The system of claim 18, wherein the inventory management module further having instruction to:

determine an optimum customer service level for each item in each location based on the computed gross margin for each item in each location in the determined customer service level range to maximize the gross margin.

20. The system of claim 19, wherein the inventory management module further having instructions to:

determine a required inventory level for each item in each location based on the determined optimum customer service level and demand pattern to maximize the gross margin.

21. The system of claim 20, wherein the inventory management module further having instructions to:

determine a required inventory level for each item in each location based on the determined optimum customer service level and parameters selected from the group consisting of order lead time, delivery schedule, demand pattern and the computed replenishment order quantity.

22. A system for merchandise inventory management system to maximize gross margin, comprising:

an inventory management module configured to model inventory to maximize gross margin as a function of replenishment of merchandise that is based on optimum customer service level.

23. The system of claim 22, wherein the inventory management module is further configured to model the inventory to maximize gross margin as a function of the replenishment of merchandise that is based on the optimum customer service level comprising assumed values for at least inventory carrying costs, lost sales costs and markdown costs.

24. The system of claim 23, wherein the inventory management module is further configured to model the inventory to maximize gross margin as a function of the replenishment for each item in each location based on the optimum customer service level.

25. The system of claim 24, wherein the inventory management module comprises:

a service level simulator configured to determine a desired customer service level range for each item in each location based on parameters selected from the group consisting of sales history, economic order quantity, markdown information and forecasted future demand;

a safety stock calculator configured to compute a safety stock level for each item in each location for each customer service level in the determined customer service level range using supplier lead time information and the forecasted future demand;

a replenishment simulator configured to compute a replenishment quantity for each item in each location for each customer service level in the determined customer service level range based on the computed safety stock level, the forecast demand pattern and the economic order quantity; and

a metrics evaluator configured to compute a gross margin for each item in each location for each customer service level in the determined customer service level range based on the computed replenishment quantity, lost sales, the inventory carrying costs, markdown schedule and other financial information.

26. The system of claim 25, wherein the safety stock calculator determines an optimum customer service level for each item in each location based on the computed gross margin for each item in each location in the determined customer service level range to maximize the gross margin.

27. The system of claim 26, wherein the safety stock calculator determines a required inventory level for each item in each location based on the determined optimum customer service level and demand pattern to maximize the gross margin.

28. The system of claim 27, wherein the safety stock calculator determines a required inventory level for each item in each location based on the determined optimum customer service level and parameters selected from the group consisting of order lead time, delivery schedule, demand pattern, and the computed replenishment order quantity.