Patent ID: 7958020

Claim:
An inventory management method for managing an inventory of goods for a plurality of demand groups with each demand group having at least one service quality, the method comprising: a computer processor coupled to a memory for performing the following steps: (a) arranging demand groups in an order according to a service quality; (b) determining parameters to be applied based on the demand group order comprising: (i) calculating for a total demand of demand groups G i to G N a safety stock corresponding to service quality SL i ; (ii) calculating for a total demand of demand groups G i to G N a safety stock corresponding to service quality SL i-1 ; (iii) determining a safety stock B i according to the formula: B i =Safety stock corresponding to service quality SL i −safety stock corresponding to service quality SL i-1 ; (iv) repeating steps (i) to (iii) for 1≦i≦N; (v) determining a total safety stock for all demand groups for all service qualities according to the formula: B ALL =ΣB i (1 ≦i≦N ); and (vi) determining a shipment limit, Z i , for each group G L for 1≦i≦N wherein Z i =ΣB j (( i+ 1)≦ j≦N ) where B i is (safety stock corresponding to service quality SL j )−(safety stock corresponding SL j-1 ) and i= 1 to N ; and (c) determining an order placement of the goods and a shipment of the goods based on a shipment limit of each demand group.