Patent ID: 7536311

Claim:
A computer-implemented method performed with a computer having a processor and a memory for estimating component shortage risk of a component used to make products during a manufacturing process, the component shortage risk for use in placing orders for the component to help ensure that sufficient units of the component are available during the manufacturing of the products, comprising: identifying the component used to make the products in the manufacturing process; computing by the processor a probability of shortage for the component based on statistical information regarding a demand for the products, a maximum expeditable level of the component, and connect rates that describe a consumption of the component for each unit of the products wherein the probability of shortage is represented by the quantity r in the formula: r=∫ d ∞ N ( x,a ·μ,√{square root over ( a T Σa )}) dx, wherein: d is the maximum expeditable level of the component, N(x,μ,σ) is a normal density function having a mean equal to μ and a variance equal to σ 2 , a is a vector of the connect rates for the component, the connect rates describing a consumption of the component for each unit of the products, μ is a mean demand of the products, and Σ represents a demand covariance between demand of a first of the products and demand of a second of the products; and generating an output based on at least the probability of shortage, the output representing the component shortage risk of the identified component for use in placing orders for the component to help ensure that sufficient units of the component are available during the manufacturing of the products.