Expediting in Two-Echelon Spare Parts Inventory Systems

Problem definition: We consider dual sourcing in a distribution network for spare parts consisting of one central warehouse and multiple local warehouses. Each warehouse keeps multiple types of repairable parts to maintain several types of capital goods. The repair shop at the central warehouse has two repair options for each repairable part: a regular repair option and an expedited repair option. Irrespective of the repair option, each repairable part uses a certain resource for its repair. In the design of these inventory systems, companies need to decide on stocking levels and expedite thresholds such that total stock investments are minimized while satisfying asset availability and expediting constraints. Academic/practical relevance: Although most companies have the possibility to expedite the repair of parts in short supply, no contributions have been made that incorporate such dynamic expediting policies in repairable investment decisions. Anticipating expediting decisions that will be made later leads to substantial reductions in repairable investments. Methodology: We use queueing theory to determine the performance of the central warehouse and subsequently find the performance of all local warehouses using binomial disaggregation. For the optimization problem, we develop a greedy heuristic and a decomposition and column generation based algorithm. Results: Both solution approaches perform very well with average optimality gaps of 2.38 and 0.27%, respectively, across a large test bed of industrial size. The possibility to expedite the repair of failed parts is effective in reducing stock investments with average reductions of 7.94% and even reductions up to 19.61% relative to the state of the art. Managerial implications: Based on a case study at Netherlands Railways, we show how managers can significantly reduce the investment in repairable spare parts when dynamic repair policies are leveraged to prioritize repair of parts whose inventory is critically low.

After sales services for repairable parts with service level agreements

In this study, inventory systems for repairable-parts with service level consideration are studied. The first study develops a multi-parts inventory system and transportation decisions. A failed part might be repairable at the stock location, or at repair facilities, or it might be non repairable, which should be replaced by a new purchased part. The objective is to find the base stock levels and shipping modes that maximizes the total weighted fill rate within a given budget. An optimization model and the properties of the objective function are developed. An approximation method is used to eliminate the highly non-linearity of the objective function, and the optimality of approximated model is discussed under specific conditions. The results of numerical experiments show the benefits of alternative transportation mode. Failure rates are observed to be the most significant factor in determining the assigned base stock level and shipping mode. A two-echelon repairable-parts inventory system is considered in the second study, where emergency purchasing and ordering from the central warehouse are allowed to obtain high service level. A dynamic decision making model is developed that minimizes the system's operational costs, including transportation, stocking and purchasing new parts during the contract period, and provides the required service level over the contract period. The numerical experiments show the benefits of purchasing and ordering options in systems with high penalty costs and long repair times, especially where the allocated inventory to the stock location is not enough to guarantee the target service level. Our model also provides the best base stock levels that minimize the operational costs and initial investments at the stock location. In the previous studies, we assumed that the contractual terms are given to the supplier and are considered as fixed parameters. The main focus in the last study is providing the contractual terms to the supplier that prompts him to provide a better service performance. The decision maker in this system is the customer, and he requires a minimum service level from the supplier. The customer is willing to grant the supplier for a better service performance by providing incentives. The objective is to find the terms of contract, the fixed payment, incentives and contract duration, that maximize the service provided by the supplier during the planning horizon under a constrained budget. We first develop a mixed integer programming model assuming the information on the supplier's cost and service is visible to the customer. Then, we extend our model to a robust model in which the uncertainty of information is included.

The Determination of Low Consumption Repairable Air Materiel Consumption Quota

Aiming the problem of low consumption air materiel repairable parts consumption quota, the paper creates a calculation model, gives the methods and processes solving the model, and explain the solving process with examples specifically, for the development of air material consumption quota provides an effective approach for air force air materiel system.