Method for providing inventory optimization
First Claim
1. A computer implemented method for optimizing inventory levels of products in a complex supply chain network including one or more internal nodes representing a supplier or a manufacturer and one or more external nodes representing a distributor or a retailer, the method comprising the steps of:
- a. providing information including a supply chain network topology indicating flow of products between said internal and external nodes of said supply chain network, an external demand for each of said external nodes and service level requirements for each of said external nodes;
b. constructing a representative model of said supply chain network topology;
c. deriving an internal demand for each of said internal nodes from said external demand;
d. initializing fill rates for each of said internal nodes;
e. estimating actual lead time for said internal and external nodes before said external demand for said products is fulfilled;
f. determining said inventory levels for said internal and external nodes using said actual lead time and said internal demand;
g. determining fill rates of said external nodes to meet said service level requirements;
h. calculating a total inventory cost for all said products in said complex supply chain network;
i. estimating gradient information of said total inventory cost with respect to said initialized fill rates of said internal nodes to find a minimum total inventory cost;
j. applying an optimization routine to reset said fill rates of said internal nodes based on said gradient information; and
k. repeating steps e through j, until optimal fill rates for said internal nodes are found; and
l. modifying the inventory levels of product based on said found optimal fill rates for said internal nodes in minimizing said total inventory cost thereby optimizing inventory levels of products.
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Abstract
A method for providing inventory optimization for levels of products in a complex supply chain network for multiple internal supplier or manufacturer locations and external distributor or retailer locations. The invention constructs a representative supply chain network model to indicate the flow of products between internal and external locations, it determines inventory levels and fill rates to meet the service level requirements, calculates a total inventory cost for all products in the network, and optimizes the fill rates based on estimated gradient information of the total inventory cost.
439 Citations
19 Claims
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1. A computer implemented method for optimizing inventory levels of products in a complex supply chain network including one or more internal nodes representing a supplier or a manufacturer and one or more external nodes representing a distributor or a retailer, the method comprising the steps of:
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a. providing information including a supply chain network topology indicating flow of products between said internal and external nodes of said supply chain network, an external demand for each of said external nodes and service level requirements for each of said external nodes; b. constructing a representative model of said supply chain network topology; c. deriving an internal demand for each of said internal nodes from said external demand; d. initializing fill rates for each of said internal nodes; e. estimating actual lead time for said internal and external nodes before said external demand for said products is fulfilled; f. determining said inventory levels for said internal and external nodes using said actual lead time and said internal demand; g. determining fill rates of said external nodes to meet said service level requirements; h. calculating a total inventory cost for all said products in said complex supply chain network; i. estimating gradient information of said total inventory cost with respect to said initialized fill rates of said internal nodes to find a minimum total inventory cost; j. applying an optimization routine to reset said fill rates of said internal nodes based on said gradient information; and k. repeating steps e through j, until optimal fill rates for said internal nodes are found; and l. modifying the inventory levels of product based on said found optimal fill rates for said internal nodes in minimizing said total inventory cost thereby optimizing inventory levels of products. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18)
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19. A computer program device readable by a machine, tangibly embodying a program of instructions executable by a machine to perform method steps for optimizing inventory levels of products in a complex supply chain network including one or more internal nodes representing a supplier or a manufacturer and one or more external nodes representing a distributor or a retailer, the method comprising the steps of:
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a. providing information including a supply chain network topology indicating flow of products between said internal and external nodes of said supply chain network, an external demand for each of said external nodes and service level requirements for each of said external nodes; b. constructing a representative model of said supply chain network topology; c. deriving an internal demand for each of said internal nodes from said external demand; d. initializing fill rates for each of said internal nodes; e. estimating actual lead time for said internal and external nodes before said external demand for said products is fulfilled; f. determining said inventory levels for said internal and external nodes using said actual lead time and said internal demand; g. determining fill rates of said external nodes to meet said service level requirements; h. calculating a total inventory cost for all said products in said complex supply chain network; i. estimating gradient information of said total inventory cost with respect to said initialized fill rates of said internal nodes to find a minimum total inventory cost; j. applying an optimization routine to reset said fill rates of said internal nodes based on said gradient information; and k. repeating steps e through j, until optimal fill rates for said internal nodes are found; and l. modifying the inventory levels of product based on said found optimal fill rates for said internal nodes in minimizing said total inventory cost thereby optimizing inventory levels of products.
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Specification