Patent ID: 8055520

Claim:
A computer system for selecting a supplier, the computer comprising: a supplier system for providing componentized costs for producing a single run of an item to be purchased over a plurality of runs for a plurality of suppliers, wherein the componentized costs include fixed costs for setting up the run and variable costs for producing each item according to various order specifications and order quantities; and a buyer system for identifying one of the plurality of suppliers with which an order for the item is to be placed so that a total cost of the item is minimized, wherein the one supplier is identified based on a particular order specification for the item, a demand forecast and the componentized costs over the plurality of runs; and a system for determining an optimal order quantity for a run of the item based on the following algorithm: N (2 Cf/Cv/·N ) 1/2 /(1+0.232( Cf/Cv/N ) 0.49 ) where N is the demand forecast, Cf are the fixed costs and Cv are the variable costs for the particular order specification, wherein the total costs over the plurality of runs are determined based on the optimal order quantity using the following algorithm: M ( Cf+no ( Cv )) where M is an expected run quantity and no is the optimum order quantity for the run.