Determining an inventory target for a node of a supply chain
View Patent ↗Determining an inventory target for a node of a supply chain includes calculating a demand stock for satisfying a demand over supply lead time at the node of the supply chain, and calculating a demand variability stock for satisfying a demand variability of the demand over supply lead time at the node. A demand bias of the demand at the node is established. An inventory target for the node is determined based on the demand stock and the demand variability stock in accordance with the demand bias.
1. A method of optimizing a supply chain parameter of a node of a supply chain, comprising:
calculating, by a computer, an inventory target for a node of a supply chain; by:
calculating a demand stock that satisfies a demand over supply lead time at a node of the supply chain;
calculating a demand variability stock that satisfies a demand variability of the demand over supply lead time at the node;
establishing the demand bias of the demand at the node; and
determining the inventory target of the node based on the demand stock and the demand variability stock in accordance with the demand bias;
changing, by the computer, a supply parameter associated with the node, the change in the supply parameter associated with a supply parameter cost or a supply parameter benefit;
adjusting, by the computer, the supply parameter associated with the node, when the benefit of the supply parameter exceeds the cost of the supply parameter; and
adjusting, by the computer, the inventory target of the node based on the adjusted supply parameter.
2. The method of claim 1 , further comprising:
changing, by the computer, a demand parameter associated with the node, the change in the demand parameter associated with a demand parameter cost or a demand parameter benefit;
adjusting, by the computer, the demand parameter associated with the node, when the benefit of the demand parameter exceeds the cost of the demand parameter; and
adjusting, by the computer, the inventory target of the node based on the adjusted demand parameter.
3. The method of claim 1 , wherein the supply parameter comprises the supply lead time or supply lead time variability.
4. The method of claim 2 , wherein the demand parameter comprises a mean demand or the demand variability.
5. The method of claim 1 , wherein calculating the inventory target of the node, comprises:
establishing that a predicted demand is less than an actual demand; and
using the demand stock but not the demand variability stock in determining the inventory target.
6. The method of claim 2 , further comprising:
changing a second demand parameter associated with the node, the change in the second demand parameter associated with a second demand cost and a second demand benefit;
changing a second supply parameter associated with the node, the change in the second supply parameter associated with a second supply cost and a second supply benefit;
determining the inventory target of the node according to the change in the supply parameter, the change in the demand parameter, and the comparison of the second demand cost and the second supply benefit.
7. The method of claim 2 , further comprising:
generating a demand forecast;
determining the demand over supply lead time from the demand forecast; and
determining the demand variability of the demand over supply lead time from the demand forecast.
8. The method of claim 2 , further comprising:
identifying a business model associated with the supply chain; and
adjusting the supply parameter and the demand parameter in accordance with the business model.
9. A system of optimizing a supply chain parameter of a supply chain, comprising:
an optimization engine tangibly embodied on a non-transitory computer-readable medium configured to calculate an inventory target for a node of a supply chain, comprising:
calculate a demand stock that satisfies a demand over supply lead time at a node of the supply chain;
calculate a demand variability stock that satisfies a demand variability of the demand over supply lead time at the node;
establish the demand bias of the demand at the node; and
determine the inventory target of the node based on the demand stock and the demand variability stock in accordance with the demand bias;
change a supply parameter associated with the node, the change in the supply parameter associated with a supply parameter cost or a supply parameter benefit;
adjust the supply parameter associated with the node, when the benefit of the supply parameter exceeds the cost of the supply parameter; and
adjust the inventory target of the node based on the adjusted supply parameter.
10. The system of claim 9 , further comprising:
change a demand parameter associated with the node, the change in the demand parameter associated with a demand parameter cost or a demand parameter benefit;
adjust the demand parameter associated with the node, when the benefit of the demand parameter exceeds the cost of the demand parameter; and
adjust the inventory target of the node based on the adjusted demand parameter.
11. The system of claim 9 , wherein the optimization engine is further configured to calculate the inventory target of the node, by:
establishing that a predicted demand is less than an actual demand; and
using the demand stock but not the demand variability stock in determining the inventory target.
12. The system of claim 10 , wherein the computer system is further configured to:
change a second demand parameter associated with the node, the change in the second demand parameter associated with a second demand cost and a second demand benefit;
change a second supply parameter associated with the node, the change in the second supply parameter associated with a second supply cost and a second supply benefit;
determine the inventory target of the node according to the change in the supply parameter, the change in the demand parameter, and the comparison of the second demand cost and the second supply benefit.
13. The system of claim 10 , wherein the computer system is further configured to:
generate a demand forecast;
determine the demand over supply lead time from the demand forecast; and
determine the demand variability of the demand over supply lead time from the demand forecast.
14. The system of claim 10 , wherein the computer system is further configured to:
identify a business model associated with the supply chain; and
adjust the supply parameter and the demand parameter in accordance with the business model.
15. A non-transitory computer-readable medium embodied with software for optimizing a supply chain parameter of a node of a supply chain, the software when executed by a computer is configured to:
calculate an inventory target for a node of a supply chain; comprising:
calculate a demand stock that satisfies a demand over supply lead time at a node of the supply chain;
calculate a demand variability stock that satisfies a demand variability of the demand over supply lead time at the node;
establish the demand bias of the demand at the node; and
determine the inventory target of the node based on the demand stock and the demand variability stock in accordance with the demand bias;
change a supply parameter associated with the node, the change in the supply parameter associated with a supply parameter cost or a supply parameter benefit;
adjust the supply parameter associated with the node, when the benefit of the supply parameter exceeds the cost of the supply parameter; and
adjust the inventory target of the node based on the adjusted supply parameter.
16. The non-transitory computer-readable medium software of claim 15 , wherein the software is further configured to:
change a demand parameter associated with the node, the change in the demand parameter associated with a demand parameter cost or a demand parameter benefit;
adjust the demand parameter associated with the node, when the benefit of the demand parameter exceeds the cost of the demand parameter; and
adjust the inventory target of the node based on the adjusted demand parameter.
17. The non-transitory computer-readable medium software of claim 15 , wherein the software calculates the inventory target of the node, by:
establishing that a predicted demand is less than an actual demand; and
using the demand stock but not the demand variability stock in determining the inventory target.
18. The non-transitory computer-readable medium software of claim 16 , wherein the software is further configured to:
change a second demand parameter associated with the node, the change in the second demand parameter associated with a second demand cost and a second demand benefit;
change a second supply parameter associated with the node, the change in the second supply parameter associated with a second supply cost and a second supply benefit;
determine the inventory target of the node according to the change in the supply parameter, the change in the demand parameter, and the comparison of the second demand cost and the second supply benefit.
19. The non-transitory computer-readable medium software of claim 16 , wherein the software is further configured to:
generate a demand forecast;
determine the demand over supply lead time from the demand forecast; and
determine the demand variability of the demand over supply lead time from the demand forecast.
20. The non-transitory computer-readable medium software of claim 16 , wherein the software is further configured to:
identify a business model associated with the supply chain; and
adjust the supply parameter and the demand parameter in accordance with the business model.