# US 10,504,057 B2 · Executing multi-echelon online and store retail network stocking plan based on stock-out costs

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- Number: US 10,504,057 B2
- Document ID: US10504057B2
- Status: Granted
- Kind: B2
- Application number: 15/420,769
- Filed: 2017-01-31
- Published: 2018-08-02
- Granted: 2019-12-10
- Earliest claimed: 2017-01-31
- Assignees: Walmart Apollo, LLC
- Applicants: Wal-Mart Stores, Inc.
- Inventors: John Bowman; Jagtej Bewli; Bradley Weill; Yamini Kangude; Sony Gregory
- Web page: https://patentgrep.com/patent/US10504057B2

## CPC

- G06Q 10/087: Inventory or stock management, e.g. order filling, procurement or balancing against orders
- G06Q 10/08726: {for replenishment processing, procedures, or recommendations using forecasting or optimisation}
- G06Q 30/0202: Market predictions or forecasting for commercial activities
- G06Q: INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR

## Abstract

In many embodiments, a method can comprise receiving an online order for an item from a user and receiving an estimate of a network stockout cost of a network associated with the item, the network comprising at least a first fulfillment center and a second fulfillment center. In some embodiments, the method further can comprise updating a first local stockout cost and updating a second local stockout. In various embodiments, the method further can comprise executing a first stocking plan for the item at the first fulfillment center based at least in part on the updated first local stockout cost, executing a second stocking plan for the item at the second fulfillment center based at least in part on the updated second local stockout cost, and selecting the first fulfillment center to deliver the item pursuant to the online order from the user based at least in part on the first stocking plan. Other embodiments of related methods and systems are also provided.

## Claims

### Claim 1

A system comprising:
one or more processors; and
one or more non-transitory computer-readable media configured to store computing instructions configured to run on the one or more processors and perform:
receiving an online order for an item from a user;
receiving an estimate of a network stockout cost of a network associated with the item, the network comprising at least a first fulfillment center and a second fulfillment center;
determining a first local stockout cost of the first fulfillment center for the item by allocating a first portion of the network stockout cost to the first fulfillment center;
determining a second local stockout cost of the second fulfillment center for the item by allocating a second portion of the network stockout cost to the second fulfillment center;
updating the first local stockout cost by a first formula:
b1*=EFR2*b1+(1−EFR2)*bN;
wherein:
b1* is an updated first local stockout cost;
EFR2 is a second expected fill rate of the second fulfillment center;
b1 is the first local stockout cost; and
bN is the network stockout cost;
updating the second local stockout cost by a second formula:
b2*=EFR1*b2+(1−EFR1)*bN;
wherein:
b2* is an updated second local stockout cost;
EFR1 is a first expected fill rate of the first fulfillment center; and
b2 is the second local stockout cost;
executing a first stocking plan for the item at the first fulfillment center based at least in part on the updated first local stockout cost, wherein the first stocking plan comprises a maximum number of units of the item to order for the first fulfillment center;
after delivery of a first shipment comprising the item to the first fulfillment center, sending instructions to re-order a first supply of the item for the first fulfillment center based on at least the first stocking plan;
executing a second stocking plan for the item at the second fulfillment center based at least in part on the updated second local stockout cost, wherein the second stocking plan comprises a maximum number of units of the item to order for the second fulfillment center;
after delivery of a second shipment comprising the item to the second fulfillment center, sending instructions to re-order a second supply of the item for the second fulfillment center based on at least the second stocking plan;
in response to receiving the online order for the item from the user, selecting the first fulfillment center to deliver the item pursuant to the online order from the user; and
after selecting the first fulfillment center to deliver the item, sending instructions for delivering the item from the first fulfillment center to the user based at least in part on the first stocking plan.

### Claim 2 (depends on 1)

The system of claim 1, wherein:
the item comprises a holding cost, the holding cost comprising:
a first item holding cost associated with stocking the item at the first fulfillment center; and
a second item holding cost associated with stocking the item at the second fulfillment center.

### Claim 3 (depends on 2)

The system of claim 2, wherein:
the first local stockout cost is based at least in part on the first item holding cost; and
the second local stockout cost is based at least in part on the second item holding cost.

### Claim 4 (depends on 1)

The system of claim 1, wherein:
the computing instructions are further configured to run on the one or more processors and perform:
assigning a first geographic area to the first fulfillment center; and
assigning a second geographic area to the second fulfillment center, wherein the first geographic area is different from the second geographic area.

### Claim 5 (depends on 1)

The system of claim 1, wherein:
the computing instructions are further configured to run on the one or more processors and perform:
determining an updated first mean demand of the item at the first fulfillment center based at least in part on the second expected fill rate.

### Claim 6 (depends on 5)

The system of claim 5, wherein:
determining the updated first mean demand of the item at the first fulfillment center is further based at least in part on a formula:
m1*=m1+(1−EFR2)*m2;
wherein:
m1* is the updated first mean demand;
m1 is an estimated first mean demand; and
m2 is an estimated second mean demand.

### Claim 7 (depends on 5)

The system of claim 5, wherein:
the computing instructions are further configured to run on the one or more processors and perform:
determining an updated second mean demand of the item at the second fulfillment center based at least in part on the first expected fill rate.

### Claim 8 (depends on 7)

The system of claim 7, wherein:
determining the updated second mean demand of the item at the second fulfillment center is further based at least in part on a formula:
m2*=m2+(1−EFR1)*m1;
wherein:
m2* is the updated second mean demand;
m2 is an estimated second mean demand; and
m1 is an estimated first mean demand.

### Claim 9

A method comprising:
receiving an online order for an item from a user;
receiving an estimate of a network stockout cost of a network associated with the item, the network comprising at least a first fulfillment center and a second fulfillment center;
determining a first local stockout cost of the first fulfillment center for the item by allocating a first portion of the network stockout cost to the first fulfillment center;
determining a second local stockout cost of the second fulfillment center for the item by allocating a second portion of the network stockout cost to the second fulfillment center;
updating the first local stockout cost by a first formula:
b1*=EFR2*b1+(1−EFR2)*bN;
wherein:
bi* is an updated first local stockout cost;
EFR2 is a second expected fill rate of the second fulfillment center;
b1 is the first local stockout cost; and
bN is the network stockout cost;
updating the second local stockout cost by a second formula:
b2*=EFR1*b2+(1−EFR1)*bN;
wherein:
b2* is an updated second local stockout cost;
EFRi is a first expected fill rate of the first fulfillment center; and
b2 is the second local stockout cost;
executing a first stocking plan for the item at the first fulfillment center based at least in part on the updated first local stockout cost, wherein the first stocking plan comprises a maximum number of units of the item to order for the first fulfillment center;
after delivery of a first shipment comprising the item to the first fulfillment center, sending instructions to re-order a first supply of the item for the first fulfillment center based on at least the first stocking plan;
executing a second stocking plan for the item at the second fulfillment center based at least in part on the updated second local stockout cost, wherein the second stocking plan comprises a maximum number of units of the item to order for the second fulfillment center;
after delivery of a second shipment comprising the item to the second fulfillment center, sending instructions to re-order a second supply of the item for the second fulfillment center based on at least the second stocking plan;
in response to receiving the online order for the item from the user, selecting the first fulfillment center to deliver the item pursuant to the online order from the user; and
after selecting the first fulfillment center to deliver the item, sending instructions for delivering the item from the first fulfillment center based at least in part on the first stocking plan.

### Claim 10 (depends on 9)

The method of claim 9, wherein:
the item comprises a holding cost, the holding cost comprising:
a first item holding cost associated with stocking the item at the first fulfillment center; and
a second item holding cost associated with stocking the item at the second fulfillment center.

### Claim 11 (depends on 10)

The method of claim 10, wherein:
the first local stockout cost is based at least in part on the first item holding cost; and
the second local stockout cost is based at least in part on the second item holding cost.

### Claim 12 (depends on 9)

The method of claim 9, further comprising:
assigning a first geographic area to the first fulfillment center; and
assigning a second geographic area to the second fulfillment center, wherein the first geographic area is different from the second geographic area.

### Claim 13 (depends on 9)

The method of claim 9, further comprising:
determining an updated first mean demand of the item at the first fulfillment center based at least in part on the second expected fill rate.

### Claim 14 (depends on 13)

The method of claim 13, wherein:
determining the updated first mean demand of the item at the first fulfillment center is based at least in part on a formula:
m1*=m1+(1−EFR2)*m2;
wherein:
m1* is the updated first mean demand;
m1 is an estimated first mean demand; and
m2 is an estimated second mean demand.

### Claim 15 (depends on 13)

The method of claim 13, further comprising:
determining an updated second mean demand of the item at the second fulfillment center based at least in part on the first expected fill rate.

### Claim 16 (depends on 15)

The method of claim 15, wherein:
determining the updated first mean demand of the item at the first fulfillment center is further based at least in part on a formula:
m2*=m2+(1−EFR1)*m1;
wherein:
m2* is the updated second mean demand;
m2 is an estimated second mean demand; and
m1 is an estimated first mean demand.

### Claim 17

A method comprising:
determining a network stockout cost of an item in a network, the network comprising at least a first fulfillment center and a second fulfillment center;
allocating a first portion of the network stockout cost of the item to the first fulfillment center of the network;
allocating a second portion of the network stockout cost of the item to the second fulfillment center of the network; and
updating the first portion of the network stockout cost by a first formula:
b1*=EFR2*b1+(1−EFR2)*bN;
wherein:
b1* is an updated first portion of the network stockout cost;
EFR2 is a second expected fill rate of the second fulfillment center;
b1 is the first portion of the network stockout cost; and
bN is the network stockout cost;
updating the second portion of the network stockout cost by a second formula:
b2*=EFR1*b2+(1−EFR1)*bN;
wherein:
b2* is an updated second portion of the network stockout cost;
EFR1 is a first expected fill rate of the first fulfillment center; and
b2 is the second portion of the network stockout cost;
executing a first stocking plan for the item at the first fulfillment center based at least in part on the updated first portion of the network stockout cost, wherein the first stocking plan comprises a maximum number of units of the item to order for the first fulfillment center;
after delivery of a first shipment comprising the item to the first fulfillment center, sending instructions to re-order a first supply of the item for the first fulfillment center based on at least the first stocking plan;
executing a second stocking plan for the item at the second fulfillment center based at least in part on the updated second portion of the network stockout cost, wherein the second stocking plan comprises a maximum number of units of the item to order for the second fulfillment center;
after delivery of a second shipment comprising the item to the second fulfillment center, sending instructions to re-order a second supply of the item for the second fulfillment center based on at least the second stocking plan;
in response to receiving an online order for the item from a user, selecting the first fulfillment center to deliver the item pursuant to the online order from the user; and
after selecting the first fulfillment center to deliver the item, sending instructions for delivering the item from the first fulfillment center based at least in part on the first stocking plan.

### Claim 18 (depends on 17)

The method of claim 17, wherein:
the item comprises a holding cost, the holding cost comprising:
a first item holding cost associated with stocking the item at the first fulfillment center; and
a second item holding cost associated with stocking the item at the second fulfillment center.

### Claim 19 (depends on 18)

The method of claim 18, wherein:
the first local stockout cost is based at least in part on the first item holding cost; and
the second local stockout cost is based at least in part on the second item holding cost.

### Claim 20 (depends on 17)

The method of claim 17, further comprising:
assigning a first geographic area to the first fulfillment center; and
assigning a second geographic area to the second fulfillment center, wherein the first geographic area is different from the second geographic area.