Patent ID: 8655742

Claim:
A computer implemented method for optimizing order fulfillment by considering multiple supply modes, comprising: planning supply of inventory, by a processor, said step of planning supply of inventory comprising at least, forecasting demand, estimating accuracy of said forecasted demand, and establishing reorder point policy based at least on said accuracy of said forecasted demand and a plurality of supply transportation modes, the reorder point policy being a threshold for determining whether an order to a supplier should be placed and the plurality of supply transportation modes including transportation modes with different speeds of transportation, the planning further including minimizing expected total cost incurred including order and transportation costs of the order, and inventory holding cost and backlog costs for meeting a service level target, wherein the minimizing determines at least a level of order quantity for each of the plurality of supply transportation modes while satisfying an inventory balance constraint comprising at least demands of different classes associated with different customer order priority and a sum of on-hand inventory and incoming inventory that will become available by a specific period with lead time, wherein the planning provides joint inventory replenishment and transportation decisions that minimize overall cost of both decisions, wherein the planning produces as an output the plurality of supply transportation modes including transportation modes with different speeds of transportation and an order quantity for each of the plurality of supply transportation modes, wherein the reorder point policy with safety stock level is updated using parameters including at least the service level target and transportation lead-time and cost, wherein an inventory level of the inventory is checked using inventory position and backlog data, and in response to determining that the inventory level is below the reorder point policy, new replenishment orders are placed for delivery via at least one of the plurality of supply transportation modes as determined using at least said different customer order priority and transportation budget data, to replenish the inventory to a desired level.