Patent ID: 7389248
Filing Date: 2008-06-17
Classification: G06Q

Abstract:
1. A method for selecting a supplier, comprising: providing componentized costs for producing a single run of an item to be purchased over a plurality of runs for a set of suppliers, wherein the componentized costs include fixed costs for setting up the run and variable costs for producing each item according to various order specifications and order quantities; providing a demand forecast and a particular order specification for the item; calculating a total cost for providing the item for each of the set of suppliers, wherein the total costs are calculated based on the fixed costs, the variable costs, the particular order specification and the demand forecast over the plurality of runs; identifying one of the set of suppliers for fulfilling an order for the item based on the one supplier having a lower total cost for the item than the other suppliers; and determining an optimal order quantity for a run of the item based on the following algorithm: where N is the demand forecast, Cf are the fixed costs and Cv are the variable costs for the particular order specification, wherein the total costs over the plurality of runs are determined based on the optimal order quantity using the following algorithm: where M is an expected run quantity and no is the optimum order quantity for the run.