MEIO Engine Overview

The Multi-Echelon Inventory Optimization (MEIO) Engine calculates the optimal inventory levels to satisfy desired fill rates and minimize inventory cost with the ability to set enterprise-wide constraints (budgets), site constraints (capacity, and item constraints (critical items). The engine runs for multiple sites and multiple items concurrently to balance the needs across the entire network. The MEIO Engine is a METRIC Algorithm where fill rate is derived from stocking level where that stocking level is increased at the buffers that would drive the network to the desired fill rate the most for the least cost.

The multi-item, multi-echelon engine builds a network of buffers (items at sites) that contain information such as current stocking level, safety stock, and other attributes. Buffers are connected by buffer lanes that identify an item, ship from sites, and ship to sites. All buffers for an item are connected but are disconnected from buffers of another item.

Within the network of buffers, the MEIO engine uses the historical data from the Multi-Tier Inventory Planning (MTIP) Statistics Engine and reads the mean and standard deviation of supply (lead time) and demand (forecast and forecast error). It also reads the current safety stock quantity and determines the minimum and maximum safety stock required to meet the desired service levels. Next, the user defines the desired service level in a configuration (config), a collection of flags that describe how the user wants the engine to execute. In the config the engine uses, the user may set the minimum and maximum service levels required and other parameters such as the service level for critical items, the safety stock budget, the safety stock optimization policy, and more. The user also sets objectives for the MEIO Engine, which are the engine's targets and can vary by item group.

Once the configuration and objectives for the engine are set, the MEIO engine runs. After the run, users view the MEIO Recommended Policy Report. The report enables users to review the resulting safety stock calculations from the engine, check for errors, and determine if they agree with the engine's solution. From the report, they can accept the values and update the safety stock for all buffers. The new safety stock will appear on the next run.

Typically, the steps in the MEIO process are configured to run automatically as a scheduled part of a chain of preplanned actions that are configured when the system is implemented. However, this user guide will cover configuring and running these steps individually.