Inventory management strategy evaluation system and method

• US 5,963,919 A
• Filed: 12/23/1996
• Issued: 10/05/1999
• Est. Priority Date: 12/23/1996
• Status: Expired due to Fees

• Current Assignee: Nortel Networks Limited (Nortel Networks Corporation)
• Original Assignee: Northern Telecom Limited (Nortel Networks Corporation)
• Inventors: Brinkley, Paul Andrew, Zwierzynski, Theresa McMahon, Gerenser, deceased, George J., Dorval, Thomas Lindsay
• Primary Examiner(s): Trammell, James P.
• Assistant Examiner(s): SMITH-STEWART, DEMETRA R
• Application Number:
  US08/771,684
• Time in Patent Office: 1,016 Days
• Field of Search: 705/28, 705/22, 705/10, 705/8, 705/27, 364/479.06, 364/468.05, 235/385
• US Class Current: 705/28
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 10/0875 Itemisation or classification of parts, supplies or services, e.g. bill of materials
• CPC Class Codes: G06Q 20/203 Inventory monitoring

Abstract

A system and method for evaluating an inventory management strategy combines multiple management strategies in a single inventory management system. The system analyzes the inventory portfolio on an item-by-item basis to assign the most suitable management strategy for that item. The inventory management system provides a high level of flexibility for the users to define input parameters to ensure a desired level of customer satisfaction. Additionally, it determines whether the inventory items are forecastable before predicting future demands.

Claims

1. A method for providing an inventory management system for managing an inventory portfolio with a plurality of inventory management strategies in a data processing system comprising the steps of:

accessing in the data processing system a database containing inventory resources data corresponding to the inventory portfolio and an inventory item to be evaluated;

analyzing the inventory resources data of the inventory item with the inventory resources data of the inventory portfolio;

determining an appropriate one of the inventory management strategies for the inventory; and

selecting an appropriate one of the inventory management strategies for the inventory item when it is determined which inventory management strategy for the inventory is applicable.

2. The method of claim 1 wherein the analyzing step includes the substeps of

stratifying the inventory portfolio according to a predetermined attribute of the inventory portfolio, and

comparing an attribute of the inventory item corresponding to the stratified attribute of the inventory portfolio.

3. The method of claim 2 wherein the stratifying step includes the substep of

stratifying the inventory portfolio into a plurality of stratification groups each corresponding to a different one of the attribute.

4. The method of claim 3 further including the steps of

determining predetermined thresholds for each one of the stratification groups, and

wherein the selecting step further includes the substep of

selecting the appropriate one of the inventory management strategies for the inventory item based on the determined thresholds.

5. The method of claim 1 further including the step of

determining whether a future demand of the inventory item is forecastable based on the corresponding inventory resources data.

6. The method of claim 5 wherein the determining step includes the substeps of

computing a frequency of demand of the inventory item according to the inventory resources data, and

determining whether the demand frequency of the inventory item exceeds a predetermined threshold demand frequency.

7. The method of claim 5 wherein the determining step includes the substeps of

computing a variability of demand of the inventory item according to the inventory resources data, and

determining whether the demand variability of the inventory item exceeds a predetermined threshold demand variability.

8. The method of claim 1 further including the step of

generating a management prescription for implementing the selected one of the inventory management strategies.

9. The method of claim 8 wherein the generating step includes the substep of

determining a re-order point as the management prescription.

10. The method of claim 8 wherein the generating step includes the substep of

determining a safety stock quantity as the management prescription.

11. The method of claim 8 wherein the generating step includes the substep of

determining an economic order quantity as the management prescription.

12. The method of claim 1 wherein the stratifying step includes the substep of

stratifying the inventory portfolio according to a cost per order of the inventory portfolio.

13. The method of claim 1 wherein the stratifying step includes the substep of

stratifying the inventory portfolio according to a total volume of the inventory portfolio.

14. The method of claim 1 wherein the stratifying step includes the substep of

stratifying the inventory portfolio according to an order frequency of the inventory portfolio.

15. The method of claim 1 further including the step of

displaying the selected management strategy.

16. A method for providing an inventory management system in a data processing system comprising the steps of:

storing in a database located in the data processing system historical data corresponding to an inventory item;

computing a demand frequency of the inventory item from the historical data;

determining whether a future demand of the inventory item is forecastable based on the demand frequency;

determining an appropriate inventory management strategy for the inventory based on the determination of whether the future demand of the inventory item is forecastable; and

selecting the appropriate inventory management strategy for the inventory item for the inventory item when it is determined which inventory management strategy for the inventory is applicable.

17. The method of claim 16 wherein the determining step further includes the substep of

determining whether the computed demand frequency exceeds a predetermined threshold demand frequency.

18. The method of claim 16 further including the steps of

computing a variability of demand of the inventory item from the historical data, and

determining whether the demand variability of the inventory item exceeds a predetermined threshold demand variability.

19. A method performed by a data processing system for providing an inventory management system, comprising the steps of:

accessing in a database inventory resources data corresponding to an inventory portfolio;

accessing in the database inventory resources data corresponding to an inventory item to be evaluated;

comparing in the data processing system the inventory resources data of the inventory item to the resources data of the inventory portfolio;

selecting an appropriate inventory management strategy for the inventory item for the inventory item based on the result of the comparison; and

determining a management prescription for the inventory item based on the selected management strategy.

20. The method of claim 19 wherein the determining step further includes the substep of

determining a re-order point.

21. The method of claim 19 wherein the determining step further includes the substep of

determining a safety stock quantity.

22. The method of claim 19 wherein the determining step further includes the substep of

determining an economic order quantity.

23. An inventory management system for managing an inventory portfolio with a plurality of inventory management strategies comprising:

means for accessing a database containing inventory resources data corresponding to the inventory portfolio and an inventory item to be evaluated;

means for analyzing the inventory resources data of the inventory item with the inventory resources data of the inventory portfolio;

means for determining an appropriate one of the inventory management strategies for the inventory and;

means for selecting an appropriate one of the inventory management strategies for the inventory item when it is determined which inventory management strategy for the inventory is applicable.

24. The system of claim 23 wherein the analyzing means includes

means for stratifying the inventory portfolio according to a predetermined attribute of the inventory portfolio, and

means for comparing an attribute of the inventory item corresponding to the stratified attribute of the inventory portfolio.

25. The system of claim 24 wherein the stratifying means includes

means for stratifying the inventory portfolio into a plurality of stratification groups each corresponding to a different one of the attribute.

26. The system of claim 25 further including

means for determining predetermined thresholds for each one of the stratification groups, and

wherein the selecting means further includes

means for selecting the appropriate one of the inventory management strategies for the inventory item based on the determined thresholds.

27. The system of claim 23 further including

means for determining whether a future demand of the inventory item is forecastable based on the corresponding inventory resources data.

28. The system of claim 27 wherein the determining means includes

means for computing a frequency of demand of the inventory item according to the inventory resources data, and

means for determining whether the demand frequency of the inventory item exceeds a predetermined threshold demand frequency.

29. The system of claim 27 wherein the determining means includes

means for computing a variability of demand of the inventory item according to the inventory resources data, and

means for determining whether the demand variability of the inventory item exceeds a predetermined threshold demand variability.

30. The system of claim 23 further including

means for generating a management prescription for implementing the selected one of the inventory management strategies.

31. The system of claim 30 wherein the generating means includes

means for determining a re-order point as the management prescription.

32. The system of claim 30 wherein the generating means includes

means for determining a safety stock quantity as the management prescription.

33. The system of claim 30 wherein the generating means includes

means for determining an economic order quantity as the management prescription.

34. The system of claim 23 wherein the stratifying means includes

means for stratifying the inventory portfolio according to a cost per order of the inventory portfolio.

35. The system of claim 23 wherein the stratifying means includes

means for stratifying the inventory portfolio according to a total volume of the inventory portfolio.

36. The system of claim 23 wherein the stratifying means includes

means for stratifying the inventory portfolio according to an order frequency of the inventory portfolio.

37. The system of claim 23 further including

means for displaying the selected management strategy.

38. An inventory management system comprising:

a memory containing a database that stores historical data corresponding to an inventory item;

means for computing a demand frequency of the inventory item from the historical data;

means for determining whether a future demand of the inventory item is forecastable based on the demand frequency;

means for determining an appropriate inventory management strategies for the inventory based on the determination of whether the future demand of the inventory item is forecastable; and

means for selecting an appropriate inventory management strategy for the inventory item for the inventory item when it is determined which inventory management strategy for the inventory is applicable.

39. The system of claim 38 wherein the determining means includes

means for determining whether the computed demand frequency exceeds a predetermined threshold demand frequency.

40. The system of claim 38 further including

means for computing a variability of demand of the inventory item from the historical data, and

means for determining whether the demand variability of the inventory item exceeds a predetermined threshold demand variability.

41. An inventory management system comprising:

means for accessing in a database inventory resources data corresponding to an inventory portfolio;

means for accessing in the database inventory resources data corresponding to an inventory item to be evaluated; and

a processor configured to;

compare the inventory resources data of the inventory item to the resources data of the inventory portfolio;

select an appropriate inventory management strategy for the inventory item for the inventory item based on the result of the comparison; and

determine a management prescription for the inventory item based on the selected management strategy.

42. The system of claim 41 wherein the determining means further includes

means for determining a re-order point.

43. The system of claim 41 wherein the determining means further includes

means for determining a safety stock quantity.

44. The system of claim 41 wherein the determining means further includes

means for determining an economic order quantity.