Patent ID: 8650062

Claim:
A method, comprising: a. receiving by a digital processing system a request in digital form for estimation of an economic profit quantity and a reorder time, wherein economic profit quantity is a quantity of inventory to be ordered or produced, which corresponds to a maximum in estimated economic profit, economic profit being defined as the excess of net operating income over capital charge; b. obtaining, in digital form, a plurality of parameters needed for the estimation of the economic profit quantity; c. computing using logic executing within the digital processing system an estimation of the economic profit quantity, the logic i) utilizing a parameter from the plurality of parameters, ii) calculating net operating income using a functional relationship with income tax rate, iii) calculating capital charge using a functional relationship with expected capital value of inventory, and iv) calculating expected capital value of inventory using a functional relationship with safety stock quantity; and d. estimating the reorder time at which the economic profit quantity should be ordered or produced, the time determined by the inventory dropping below a reorder point that depends upon an estimated demand and a lead time; and e. returning, in digital form, the estimation of the economic profit quantity.