Patent ID: 8706536

Claim:
A software product comprising instructions, stored on non-transitory computer-readable media, wherein the instructions, when executed by a computer, perform steps to determine safety stock levels to be maintained by a business during a time period, comprising: a) receiving as an input: (i) a target customer service level for the business; (ii) the time period; (iii) a probability of cancellation for the item; (iv) actual historical time-series demand data for the item; (v) actual historical time-series lead-time data for the item; (vi) a minimum order quantity; b) decomposing the actual historical time-series demand data for the item to isolate a component attributable at least predominantly to a random variation in a demand for the item; c) using an array of statistical distributions to generate a random demand for the item for each of a plurality of time units within the time period and for each time unit within a mean lead-time for the item; d) decomposing the actual historical time-series lead-time data for the item to isolate a component attributable at least predominantly to a random variation in a lead-time for the item; e) using the array of statistical distributions to generate a random lead-time for the item for each of the plurality of time units within the time period and for each time unit within the mean lead-time for the item; f) estimating a first value for a reorder point to compute a first calculated service level, said reorder point reflecting a beginning balance for the item on a first time unit; g) estimating a second value for the reorder point to compute a second calculated service level; and h) estimating a third value for the reorder point to compute a third calculated service level; wherein a difference between the target service level and the third calculated service level is less than a difference between the target service level and the first calculated service level; wherein the difference between the target service level and the third calculated service level is less than a difference between the target service level and the second calculated service level.