Enhanced (R,S,S) policy for periodic review single-item inventory control
First Claim
1. A computer-implemented method for calculating an order quantity and a delay value for placing an order in an (R,s,S) policy inventory control system, comprising the steps of:
- inputting a plurality of forecast data representing a statistical demand for an inventory item over a time duration, and inputting a service level data representing a statistical standard for an inventory position;
calculating a series of first and second reordering points, and a series of order-up-to points for a plurality of time periods within said time duration, based on said input forecast data and service level data;
for each of said plurality of time periods, detecting the inventory position and, if the inventory position is below the first reorder point for the time period thenif the inventory position is below the second reorder point for the time period, computing an order quantity based on said inventory position and the order-up-to-point for the time period, andif the inventory position is above the second reorder point, computing an order quantity and a delay value, said delay value being computed based on at least said inventory position and said second reorder point,wherein said order quantity and delay values are used in generating orders for said inventory item.
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Abstract
A computer implemented method provides decision support for how much of an inventory item to order and when to order where the review period is different from a basic time unit for demand realization and updates. For cases where the review period is greater than the basic time unit for describing the system, the (s,S) rule is replaced with an enhanced policy for deciding when to order and how much to order. This policy becomes necessary as in practice items are often reviewed at different frequencies, even though demand realization and inventory updates may be done every day. Given a periodic review inventory system and given a set of (s,S) values, the computer implemented method produces lower average inventory costs for the same achieved service level. Alternatively, for a given average investment in inventory, the method will result in higher service level than the corresponding (s,S) policy.
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Citations
7 Claims
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1. A computer-implemented method for calculating an order quantity and a delay value for placing an order in an (R,s,S) policy inventory control system, comprising the steps of:
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inputting a plurality of forecast data representing a statistical demand for an inventory item over a time duration, and inputting a service level data representing a statistical standard for an inventory position; calculating a series of first and second reordering points, and a series of order-up-to points for a plurality of time periods within said time duration, based on said input forecast data and service level data; for each of said plurality of time periods, detecting the inventory position and, if the inventory position is below the first reorder point for the time period then if the inventory position is below the second reorder point for the time period, computing an order quantity based on said inventory position and the order-up-to-point for the time period, and if the inventory position is above the second reorder point, computing an order quantity and a delay value, said delay value being computed based on at least said inventory position and said second reorder point, wherein said order quantity and delay values are used in generating orders for said inventory item. - View Dependent Claims (2, 3, 4, 5, 6, 7)
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Specification