Patent ID: 7853462

Claim:
A computer-implemented method for optimizing inventory targets for nodes in a multi-echelon supply chain to satisfy a target customer service level, comprising: accessing, by a computer, a supply chain model comprising an assumed value for each of the following inputs for a first time period: mean order lead time; variability of order lead time; for each of a number of order lead time intervals, mean demand within the order lead time interval; for each of the number of order lead time intervals, variability of demand within the order lead time interval; mean supply lead time for each of the nodes; and variability of supply lead time for each of the nodes; for the first time period, according to the supply chain model including the assumed values for each of the inputs, calculating, by the computer, an optimized inventory target for each of the nodes to satisfy the target customer service level by: redistributing a portion of estimated demand on an end node in the supply chain to one or more upstream nodes in the supply chain according to estimated order lead time information; and calculating the optimized inventory target for each node according to the portion of the estimated demand on the node independently of the calculation of the optimized inventory target for every other node, the optimized inventory target for the end node calculated according to the portion of the estimated demand not redistributed to the one or more upstream nodes, the optimized inventory target for each of the one or more upstream nodes calculated according to the portion of the estimated demand redistributed to the upstream node, the optimized inventory target for each of a plurality of nodes independently calculated using a different computer processor in a distributed processing environment; for the first time period, accessing, by the computer, a measured actual customer service level and a measured actual value for each of the inputs; if the measured actual customer service level for the first time period does not satisfy the target customer service level, then: for each of the inputs, determining, by the computer, a deviation between the measured actual and assumed values for the input for the first time period; and identifying, by the computer, at least one of the inputs for which the deviation for the first time period is a root cause of the measured actual customer service level for the first time period not satisfying the target customer service level; and for a subsequent second time period, using the determined deviation for the identified input for the first time period as feedback: adjusting, by the computer, the assumed value for the identified input in the supply chain model; and calculating, by the computer, a reoptimized inventory target for each of the nodes to satisfy the target customer service level.