Patent ID: 8515835

Claim:
A method of optimizing inventory among a plurality of inventory locations, comprising: receiving data associated with a hierarchy comprising a plurality of hierarchically-arranged nodes organized into parent-child relationships, wherein the nodes represent inventory locations, wherein the hierarchy includes a plurality of echelon levels, wherein a parent node is at a higher echelon level than child nodes, and wherein a parent node is a primary inventory supplier for a plurality of child nodes; receiving an identification of an inventory pool that includes particular child nodes of a particular parent node in the hierarchy, wherein the particular child nodes are located in a same echelon level or at different echelon levels that are indirectly related; receiving cost data, wherein the cost data includes a cost associated with an under-supply of inventory at a child node, a cost associated with an excess inventory at a child node, and a cost associated with transporting inventory among the particular child nodes in the inventory pool; determining, using one or more data processors, an optimal inventory amount at the particular child inventory location nodes; determining, using the one or more data processors, an estimated service amount at the particular child inventory location nodes based on the optimal inventory amounts, wherein inventory location nodes having a surplus service amount are surplus inventory location nodes, and wherein inventory location nodes having a shortage service amount are shortage inventory location nodes; optimizing, using the one or more data processors, a transshipment plan for the inventory location nodes in the inventory pool, wherein optimizing is based on the surplus inventory location nodes, the shortage inventory location nodes, the cost associated with the under-supply of inventory, the cost associated with excess inventory, and the cost associated with transporting inventory, and wherein the optimizing involves minimizing a cost associated with the inventory pool; determining, using the one or more data processors, a revised estimated service amount for the particular child inventory location nodes based on the transshipment plan; determining, using the one or more data processors, an optimal inventory amount at a particular parent inventory location node based on the revised estimated service amounts; determining, using the one or more data processors, an estimated service amount at the particular parent inventory location node based upon the optimal inventory amount for the particular parent inventory location node; and optimizing, using the one or more data processors, an additional transshipment plan for a plurality of additional inventory location nodes that include the particular parent inventory location node based on the estimated service amount at the particular parent inventory location node.