Method of estimating future replenishment requirements and inventory levels in physical distribution networks

• US 6,006,196 A
• Filed: 05/01/1997
• Issued: 12/21/1999
• Est. Priority Date: 05/01/1997
• Status: Expired due to Term

• Current Assignee: Toshiba Global Commerce Solutions Holdings Corporation (Toshiba Corporation)
• Original Assignee: International Business Machines Corporation
• Inventors: Katircioglu, Kaan Kudsi, Yao, David Da-Wei, Feigin, Gerald E.
• Primary Examiner(s): MacDonald, Allen R.
• Assistant Examiner(s): CRECCA, MICHELE S
• Application Number:
  US08/848,073
• Time in Patent Office: 964 Days
• Field of Search: 705/10, 705/22, 705/28, 705/8
• US Class Current: 705/7.31
• CPC Class Codes: G06Q 10/08 Logistics, e.g. warehousing, loading or distribution; Inventory or stock management
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities

Abstract

A method suitable for use in a physical distribution network. The method comprises the steps of using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements; and, incorporating within the DRP logic an uncertainty of future demand for estimating at least one of future replenishment requirements and inventory levels in the physical distribution network.

Claims

1. A program storage device readable by a machine, tangibly embodying a program of instructions executable by the machine to perform a method for use in a physical distribution network, the method comprising:

1) using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements;

2) incorporating within the DRP logic an uncertainty of future demand for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network; and

3) controlling said at least one of said future replenishment requirements and inventory levels in said physical distribution network based on said estimate,

wherein said future demand is correlated across one of time and among different products.

2. A device as in claim 1, wherein said using a DRP logic comprises using higher moment information in estimating at least one of future replenishment requirements and inventory levels in the physical distribution network.

3. A device according to claim 2, further comprising using the higher moment information as input to a Monte Carlo simulation technique for estimating at least one of future replenishment requirements and inventory levels in the physical distribution network.

4. A device according to claim 2, further comprising using the higher moment information as input to an analytical technique for estimating at least one of future replenishment requirements and inventory levels in the physical distribution network.

5. The device according to claim 1, wherein said estimating future on-hand inventory and future replenishment requirements is performed at all echelons of said distribution network.

6. The device according to claim 1, wherein said incorporating within the DRP logic said uncertainty of future demand includes considering variability of unknown future demand.

7. The device according to claim 3, wherein said replenishment is performed for cases with order-quantity constraints, such that there are order size restrictions.

8. The device according to claim 4, wherein said replenishment is performed lot-for-lot, such that there are no order size restrictions.

9. A distribution resource planning engine comprising:

1) input means for inputting to the engine information derived from a database, a forecast engine, and an inventory planning engine and comprising respectively inventory status, planning parameters, and demand forecasts;

2) logic means, connectable to the input means and operable upon said information derived from the database and comprising a distribution resource planning agent incorporating an uncertainty of future demand, for providing an estimate of at least one of future replenishment requirements and inventory levels in a physical distribution network;

3) output means, connected to the logic means, for outputting estimates of at least one of future replenishment requirements and inventory levels in a physical distribution network, said at least one of said future replenishment requirements and inventory levels in said physical distribution network being controlled based on said estimate,

wherein said future demand is correlated across one of time and among different products.

10. An engine according to claim 9, wherein the logic means generates estimates of future on-hand inventory levels, future backordered demand quantities, future and current recommended order quantities, and future replenishment requirements.

11. The engine according to claim 10, wherein said logic means generates said estimates at all echelons of said distribution network.

12. The engine according to claim 9, wherein said planning agent considers variability of unknown future demand.

13. The engine according to claim 9, wherein said replenishment is performed lot-for-lot, such that there are no order size restrictions.

14. The engine according to claim 9, wherein said replenishment is performed for cases with order-quantity constraints, such that there are order size restrictions.

15. A program storage device readable by a machine, tangibly embodying a program of instructions executable by the machine to perform a method for use in a physical distribution network, the method comprising:

1) using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements;

2) incorporating within the DRP logic an uncertainty of future demand for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network; and

3) controlling said at least one of said future replenishment requirements and inventory levels in said physical distribution network based on said estimate,

wherein said future demand is treated non-deterministically such that demand for a predetermined time period has a standard deviation, and wherein demand per period is assumed to follow a normal distribution and each period'"'"'s demand is independent of demand in other periods.

16. A program storage device readable by a machine, tangibly embodying a program of instructions executable by the machine to perform a method for use in a physical distribution network, the method comprising:

1) using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements;

2) incorporating within the DRP logic an uncertainty of future demand for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network;

3) controlling said at least one of said future replenishment requirements and inventory levels in said physical distribution network based on said estimate,

wherein said using a DRP logic comprises using higher moment information in estimating at least one of future replenishment requirements and inventory levels in the physical distribution network; and

4) using said higher moment information as input to a Monte Carlo simulation technique for estimating at least one of future replenishment requirements and inventory levels in the physical distribution network, and

wherein said estimating is based on a set of randomly sampled demands.

17. A program storage device readable by a machine, tangibly embodying a program of instructions executable by the machine to perform a method for use in a physical distribution network, the method comprising:

1) using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements;

2) incorporating within the DRP logic an uncertainty of future demand for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network;

3) controlling said at least one of said future replenishment requirements and inventory levels in said physical distribution network based on said estimate,

wherein said using a DRP logic comprises using higher moment information in providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network; and

4) using said higher moment information as input to an analytical technique for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution network,

wherein a back-ordered demand is estimated as being any of zero (0) and a positive number such that fill rate is less than 100%,

said fill rate being a fraction of demand that is filled by an on-hand, off-the-shelf quantity.

18. A distribution resource planning engine comprising:

1) input means for inputting to the engine information derived from a database, a forecast engine, and an inventory planning engine and comprising respectively inventory status, planning parameters, and demand forecasts;

2) logic means, connected to the input means and operable upon its information and comprising a distribution resource planning agent incorporating an uncertainty of future demand, for providing an estimate of at least one of future replenishment requirements and inventory levels in a physical distribution network; and

3) output means, connected to the logic means, for outputting estimates of at least one of future replenishment requirements and inventory levels in a physical distribution network, said at least one of said future replenishment requirements and inventory levels in said physical distribution network being controlled based on said estimate,

wherein said future demand is treated non-deterministically such that demand for a predetermined time period has a standard deviation,

wherein demand per period is assumed to follow a normal distribution and each period'"'"'s demand is independent of demand in other periods,

wherein a set of randomly sampled demands is used as a basis for said estimating by said logic means, and said demand is correlated across one of time and among different products,

a back-ordered demand being estimated as any of zero (0) and a positive number such that fill rate is less than 100%,

said fill rate being a fraction of demand that is filled by an on-hand, off-the-shelf quantity.

19. A method of estimating future replenishment requirements and inventory levels in a physical distribution network, comprising:

1) using a distribution resource planning (DRP) logic for providing estimates of at least one of projected future on-hand inventory and replenishment requirements;

2) incorporating within the DRP logic an uncertainty of future demand for providing an estimate of at least one of future replenishment requirements and inventory levels in the physical distribution networks; and

3) controlling said at least one of said future replenishment requirements and inventory levels in said physical distribution network based on said estimate,

wherein said future demand is correlated across one of time and among different products.