{
  "patent_number": "US 8732039",
  "country": "US",
  "title": "How Amazon Optimizes Where to Store Products to Avoid Stockouts",
  "original_title": "Allocating regional inventory to reduce out-of-stock costs",
  "summary": "A mathematical method for deciding how many items to stock in different warehouses to minimize the cost of running out of products.",
  "what_it_does": "This patent describes a computational method for distributing a fixed supply of goods across multiple regional warehouses. It uses a probabilistic model—specifically a gamma distribution—to forecast customer demand in each region. By calculating the specific financial cost of an out-of-stock event in each location, the system determines the optimal number of units to store in each warehouse. The goal is to minimize the total expected cost across the entire network, ensuring that high-demand or high-cost-of-failure regions receive priority in inventory allocation.",
  "what_it_does_not_cover": [
    "Does not cover real-time inventory replenishment triggered by individual customer purchases.",
    "Does not cover the physical logistics of transporting goods between warehouses.",
    "Does not cover demand forecasting methods that do not utilize a probabilistic distribution model.",
    "Does not cover manual inventory management decisions made without the specified mathematical optimization."
  ],
  "filed": "2010-12-29",
  "granted": "2014-05-20",
  "expires": null,
  "status": "active",
  "holder": "Amazon Technologies Inc",
  "holder_url": "https://patentbrief.org/company/amazon-technologies-inc",
  "inventors": [
    {
      "name": "Xiao Yu Li",
      "url": "https://patentbrief.org/inventor/xiao-yu-li"
    },
    {
      "name": "Maomao Chen",
      "url": "https://patentbrief.org/inventor/maomao-chen"
    }
  ],
  "times_cited": 41,
  "tags": [
    "ecommerce",
    "ai_ml"
  ],
  "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.",
  "url": "https://patentbrief.org/patent/us/8732039/amazon-subscribe-save",
  "markdown_url": "https://patentbrief.org/patent/us/8732039/amazon-subscribe-save/md",
  "google_patents_url": "https://patents.google.com/patent/US8732039",
  "relatedPatents": []
}