Allocating regional inventory to reduce out-of-stock costs

Abstract

Methods and systems for allocating regional inventory to reduce out-of-stock costs are described. A method may include identifying a total number of units of an item to be stored in a plurality of regions and determining an order forecast for the item in each of the plurality of regions. The method may also include receiving a unit out-of-stock cost of the item in each of the plurality of regions and calculating an expected cost for each of the plurality of regions based, at least in part, on the total number of units of the item, each region's respective order forecast, and each region's respective unit out-of-stock cost. The method may further include allocating a portion of the total number of units of the item to each of the plurality of regions to reduce a sum of the expected costs.

1 .- 16 . (canceled) 
     
     
         17 . A system, comprising:
 at least one processor; and   a memory coupled to the at least one processor, wherein the memory stores program instructions, and wherein the program instructions are executable by the at least one processor to perform operations including:
 receiving a regional demand forecast for an item for each of a plurality of regions; 
 receiving a unit out-of-stock cost of the item in each of the plurality of regions; 
 calculating an expected out-of-stock cost for each of the plurality of regions based, at least in part, on each region's respective regional demand forecast, target inventory of the item, and unit out-of-stock cost, wherein the calculating comprises calculating respective target inventories of the item for each of the plurality of regions, such that a difference between the expected out-of-stock costs for each of the plurality of regions is reduced; and 
 allocating each calculated respective target inventory of the item to the respective region of the plurality of regions. 
   
     
     
         18 . The system of  claim 17 , wherein receiving the regional demand forecast for each of the plurality of regions comprises partitioning, among the plurality of regions, a scale parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions. 
     
     
         19 . The system of  claim 17 , wherein receiving the regional demand forecast comprises partitioning, among the plurality of regions, a shape parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions. 
     
     
         20 . The system of  claim 17 , wherein:
 a target inventory of the item for a respective region is calculated based at least in part upon an allocation factor that represents a proportion of a total inventory of the item for the plurality of regions, and   calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating an allocation factor for each of the plurality of regions that makes the expected out-of-stock costs for each of the plurality of regions approximately equal to each other.   
     
     
         21 . The system of  claim 17 , wherein the sum of the target inventories for the item for each of the plurality of regions is constrained to a total number of items. 
     
     
         22 . The system of  claim 17 , wherein:
 calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating respective target inventories of the item for each of the plurality of regions, such that the expected costs for each of the plurality of regions fall within a specified range.   
     
     
         23 . An article of manufacture comprising a computer-readable storage medium having instructions stored thereon that, upon execution by a computer system, cause the computer system to perform operations comprising:
 receiving a regional demand forecast for an item for each of a plurality of regions;   receiving a unit out-of-stock cost of the item in each of the plurality of regions;   calculating an expected out-of-stock cost for each of the plurality of regions based, at least in part, on each region's respective regional demand forecast, target inventory of the item, and unit out-of-stock cost, wherein the calculating comprises calculating respective target inventories of the item for each of the plurality of regions, such that a difference between the expected out-of-stock costs for each of the plurality of regions is reduced; and   allocating each calculated respective target inventory of the item to the respective region of the plurality of regions.   
     
     
         24 . The article of manufacture of  claim 23 , wherein:
 receiving the regional demand forecast for each of the plurality of regions comprises partitioning, among the plurality of regions, a scale parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions.   
     
     
         25 . The article of manufacture of  claim 23 , wherein:
 receiving the regional demand forecast comprises partitioning, among the plurality of regions, a shape parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions.   
     
     
         26 . The article of manufacture of  claim 25 , wherein the global demand forecast is a gamma distribution. 
     
     
         27 . The article of manufacture of  claim 23 , wherein:
 a target inventory of the item for a respective region is calculated based at least in part upon an allocation factor that represents a proportion of a total inventory of the item for the plurality of regions, and   calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating an allocation factor for each of the plurality of regions that makes the expected out-of-stock costs for each of the plurality of regions approximately equal to each other.   
     
     
         28 . The article of manufacture of  claim 23 , wherein the sum of the target inventories for the item for each of the plurality of regions is constrained to a total number of items. 
     
     
         29 . The article of manufacture of  claim 23 , wherein:
 calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating respective target inventories of the item for each of the plurality of regions, such that the sum of the expected costs for each of the plurality of regions is reduced.   
     
     
         30 . A method, comprising:
 performing, by one or more computing devices, receiving a regional demand forecast for an item for each of a plurality of regions;   receiving a unit out-of-stock cost of the item in each of the plurality of regions;   calculating an expected out-of-stock cost for each of the plurality of regions based, at least in part, on each region's respective regional demand forecast, target inventory of the item, and unit out-of-stock cost, wherein the calculating comprises calculating respective target inventories of the item for each of the plurality of regions, such that a difference between the expected out-of-stock costs for each of the plurality of regions is reduced; and   allocating each calculated respective target inventory of the item to the respective region of the plurality of regions.   
     
     
         31 . The method of  claim 30 , wherein:
 receiving the regional demand forecast for each of the plurality of regions comprises partitioning, among the plurality of regions, a scale parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions.   
     
     
         32 . The method of  claim 30 , wherein:
 receiving the regional demand forecast comprises partitioning, among the plurality of regions, a shape parameter of a global demand forecast for the item corresponding to a global region that encompasses the plurality of regions.   
     
     
         33 . The system of  claim 32 , wherein the global demand forecast is a gamma distribution. 
     
     
         34 . The method of  claim 30 , wherein:
 a target inventory of the item for a respective region is calculated based at least in part upon an allocation factor that represents a proportion of a total inventory of the item for the plurality of regions, and   calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating an allocation factor for each of the plurality of regions that makes the expected out-of-stock costs for each of the plurality of regions approximately equal to each other.   
     
     
         35 . The method of  claim 30 , wherein the sum of the target inventories for the item for each of the plurality of regions is constrained to a total number of items. 
     
     
         36 . The method of  claim 30 , wherein:
 calculating an expected out-of-stock cost for each of the plurality of regions comprises calculating respective target inventories of the item for each of the plurality of regions, such that the sum of the expected costs for each of the plurality of regions is reduced.