IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v102y2021ics0305048320306824.html
   My bibliography  Save this article

Repairable spare parts provisioning for multiregional expanding fleets of equipment under performance-based contracting

Author

Listed:
  • Qin, Xuwei
  • Jiang, Zhong-Zhong
  • Sun, Minghe
  • Tang, Liang
  • Liu, Xiaoran

Abstract

Performance-based service is becoming a dominant business strategy, especially in the capital-intensive equipment industry. When new equipment is released into multiregional markets, managing repairable spare parts provisioning so as to maximize the service profit from an increasing number of installations becomes challenging since the demand for spare parts varies over time across multiregional markets. A two-echelon repairable spare parts service network is studied to support performance-based service under multiregional fleet expansions. This study proposes an adaptive multi-phase basestock policy that dynamically adjusts the basestock levels in the two-echelon warehouses and the repair capacity in the central depot to meet the nonstationary demands. A profit-centric model is formulated that considers linear-step revenue and availability bands. Using the structural properties of the optimization model, a greedy algorithm is developed based on marginal analysis to solve the problem. Numerical experiements are conducted using a case study of a real business problem and its variants to demonstrate the effectiveness and applicability of the proposed model and the greedy algorithm.

Suggested Citation

  • Qin, Xuwei & Jiang, Zhong-Zhong & Sun, Minghe & Tang, Liang & Liu, Xiaoran, 2021. "Repairable spare parts provisioning for multiregional expanding fleets of equipment under performance-based contracting," Omega, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:jomega:v:102:y:2021:i:c:s0305048320306824
    DOI: 10.1016/j.omega.2020.102328
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305048320306824
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2020.102328?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. T Jin & P Wang, 2012. "Planning performance based contracts considering reliability and uncertain system usage," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(10), pages 1467-1478, October.
    2. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    3. Sang-Hyun Kim & Morris A. Cohen & Serguei Netessine, 2007. "Performance Contracting in After-Sales Service Supply Chains," Management Science, INFORMS, vol. 53(12), pages 1843-1858, December.
    4. Craig C. Sherbrooke, 1968. "Metric: A Multi-Echelon Technique for Recoverable Item Control," Operations Research, INFORMS, vol. 16(1), pages 122-141, February.
    5. Öner, K.B. & Kiesmüller, G.P. & van Houtum, G.J., 2010. "Optimization of component reliability in the design phase of capital goods," European Journal of Operational Research, Elsevier, vol. 205(3), pages 615-624, September.
    6. Dekker, Rommert & Pinçe, Çerağ & Zuidwijk, Rob & Jalil, Muhammad Naiman, 2013. "On the use of installed base information for spare parts logistics: A review of ideas and industry practice," International Journal of Production Economics, Elsevier, vol. 143(2), pages 536-545.
    7. Nasuh Buyukkaramikli & Henny Ooijen & J. Bertrand, 2015. "Integrating inventory control and capacity management at a maintenance service provider," Annals of Operations Research, Springer, vol. 231(1), pages 185-206, August.
    8. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    9. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    10. Stephen C. Graves, 1985. "A Multi-Echelon Inventory Model for a Repairable Item with One-for-One Replenishment," Management Science, INFORMS, vol. 31(10), pages 1247-1256, October.
    11. Tongdan Jin & Heidi Taboada & Jose Espiritu & Haitao Liao, 2017. "Allocation of reliability--redundancy and spares inventory under Poisson fleet expansion," IISE Transactions, Taylor & Francis Journals, vol. 49(7), pages 737-751, July.
    12. Mirzahosseinian, H. & Piplani, R., 2011. "A study of repairable parts inventory system operating under performance-based contract," European Journal of Operational Research, Elsevier, vol. 214(2), pages 256-261, October.
    13. Costantino, Francesco & Di Gravio, Giulio & Patriarca, Riccardo & Petrella, Lea, 2018. "Spare parts management for irregular demand items," Omega, Elsevier, vol. 81(C), pages 57-66.
    14. John A. Muckstadt, 1973. "A Model for a Multi-Item, Multi-Echelon, Multi-Indenture Inventory System," Management Science, INFORMS, vol. 20(4-Part-I), pages 472-481, December.
    15. A Sleptchenko & M C van der Heijden & A van Harten, 2003. "Trade-off between inventory and repair capacity in spare part networks," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(3), pages 263-272, March.
    16. Van Foreest, Nicky D. & Teunter, Ruud H. & Syntetos, Aris A., 2018. "Base-stock policies with reservations," Omega, Elsevier, vol. 81(C), pages 48-56.
    17. Hu, Qiwei & Boylan, John E. & Chen, Huijing & Labib, Ashraf, 2018. "OR in spare parts management: A review," European Journal of Operational Research, Elsevier, vol. 266(2), pages 395-414.
    18. Diaz, Angel & Fu, Michael C., 1997. "Models for multi-echelon repairable item inventory systems with limited repair capacity," European Journal of Operational Research, Elsevier, vol. 97(3), pages 480-492, March.
    19. Sleptchenko, A. & van der Heijden, M. C. & van Harten, A., 2002. "Effects of finite repair capacity in multi-echelon, multi-indenture service part supply systems," International Journal of Production Economics, Elsevier, vol. 79(3), pages 209-230, October.
    20. P. J. Colen & M. R. Lambrecht, 2013. "Product service systems: exploring operational practices," The Service Industries Journal, Taylor & Francis Journals, vol. 33(5), pages 501-515, April.
    21. D Nowicki & U D Kumar & H J Steudel & D Verma, 2008. "Spares provisioning under performance-based logistics contract: profit-centric approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(3), pages 342-352, March.
    22. Xiao Liu & Loon Ching Tang, 2016. "Reliability analysis and spares provisioning for repairable systems with dependent failure processes and a time-varying installed base," IISE Transactions, Taylor & Francis Journals, vol. 48(1), pages 43-56, January.
    23. Izack Cohen & Morris A. Cohen & Elad Landau, 2017. "On sourcing and stocking policies in a two-echelon, multiple location, repairable parts supply chain," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(6), pages 617-629, June.
    24. Jin, Tongdan & Tian, Yu, 2012. "Optimizing reliability and service parts logistics for a time-varying installed base," European Journal of Operational Research, Elsevier, vol. 218(1), pages 152-162.
    25. Sleptchenko, A. & van der Heijden, M. C. & van Harten, A., 2005. "Using repair priorities to reduce stock investment in spare part networks," European Journal of Operational Research, Elsevier, vol. 163(3), pages 733-750, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhu, Ying & Xia, Tangbin & Chen, Zhen & Pan, Ershun & Xi, Lifeng, 2022. "Optimal maintenance service strategy for OEM entering competitive MRO market under opposite patterns," Reliability Engineering and System Safety, Elsevier, vol. 217(C).
    2. Zhu, Ying & Xia, Tangbin & Hong, Ge & Chen, Zhen & Pan, Ershun & Xi, Lifeng, 2022. "Collaborative maintenance service and component sales under coopetition patterns for OEMs challenged by booming used-component sales," Reliability Engineering and System Safety, Elsevier, vol. 226(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jin, Tongdan & Tian, Zhigang & Xie, Min, 2015. "A game-theoretical approach for optimizing maintenance, spares and service capacity in performance contracting," International Journal of Production Economics, Elsevier, vol. 161(C), pages 31-43.
    2. Qin, Xuwei & Shao, Lusheng & Jiang, Zhong-Zhong, 2020. "Contract design for equipment after-sales service with business interruption insurance," European Journal of Operational Research, Elsevier, vol. 284(1), pages 176-187.
    3. Hu, Qiwei & Boylan, John E. & Chen, Huijing & Labib, Ashraf, 2018. "OR in spare parts management: A review," European Journal of Operational Research, Elsevier, vol. 266(2), pages 395-414.
    4. Patra, Pradipta & Kumar, U. Dinesh & Nowicki, David R. & Randall, Wesley S., 2019. "Effective management of performance-based contracts for sustainment dominant systems," International Journal of Production Economics, Elsevier, vol. 208(C), pages 369-382.
    5. Xie, Wei & Liao, Haitao & Jin, Tongdan, 2014. "Maximizing system availability through joint decision on component redundancy and spares inventory," European Journal of Operational Research, Elsevier, vol. 237(1), pages 164-176.
    6. Jin, Tongdan & Tian, Yu, 2012. "Optimizing reliability and service parts logistics for a time-varying installed base," European Journal of Operational Research, Elsevier, vol. 218(1), pages 152-162.
    7. Rezapour, Shabnam & Allen, Janet K. & Mistree, Farrokh, 2016. "Reliable flow in forward and after-sales supply chains considering propagated uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 409-436.
    8. Driessen, M.A. & van Houtum, G.J. & Zijm, W.H.M. & Rustenburg, W.D., 2020. "Capacity assignment in repair shops with high material uncertainty," International Journal of Production Economics, Elsevier, vol. 221(C).
    9. Korkeamäki, Lauri & Kohtamäki, Marko & Parida, Vinit, 2021. "Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms," Journal of Business Research, Elsevier, vol. 131(C), pages 92-102.
    10. García-Benito, Juan Carlos & Martín-Peña, María-Luz, 2021. "A redistribution model with minimum backorders of spare parts: A proposal for the defence sector," European Journal of Operational Research, Elsevier, vol. 291(1), pages 178-193.
    11. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    12. Mirzahosseinian, H. & Piplani, R., 2011. "A study of repairable parts inventory system operating under performance-based contract," European Journal of Operational Research, Elsevier, vol. 214(2), pages 256-261, October.
    13. Nowicki, David R. & Randall, Wesley S. & Ramirez-Marquez, Jose Emmanuel, 2012. "Improving the computational efficiency of metric-based spares algorithms," European Journal of Operational Research, Elsevier, vol. 219(2), pages 324-334.
    14. Costantino, Francesco & Di Gravio, Giulio & Tronci, Massimo, 2013. "Multi-echelon, multi-indenture spare parts inventory control subject to system availability and budget constraints," Reliability Engineering and System Safety, Elsevier, vol. 119(C), pages 95-101.
    15. Rezapour, Shabnam & Allen, Janet K. & Mistree, Farrokh, 2016. "Reliable product-service supply chains for repairable products," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 299-321.
    16. Kazemi Zanjani, Masoumeh & Nourelfath, Mustapha, 2014. "Integrated spare parts logistics and operations planning for maintenance service providers," International Journal of Production Economics, Elsevier, vol. 158(C), pages 44-53.
    17. Xian Zhao & Jing Zhang & Xiaoyue Wang, 2019. "Joint optimization of components redundancy, spares inventory and repairmen allocation for a standby series system," Journal of Risk and Reliability, , vol. 233(4), pages 623-638, August.
    18. van der Heijden, M.C. & Alvarez, E.M. & Schutten, J.M.J., 2013. "Inventory reduction in spare part networks by selective throughput time reduction," International Journal of Production Economics, Elsevier, vol. 143(2), pages 509-517.
    19. Rappold, James A. & Van Roo, Ben D., 2009. "Designing multi-echelon service parts networks with finite repair capacity," European Journal of Operational Research, Elsevier, vol. 199(3), pages 781-792, December.
    20. Selçuk, B., 2013. "An adaptive base stock policy for repairable item inventory control," International Journal of Production Economics, Elsevier, vol. 143(2), pages 304-315.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:102:y:2021:i:c:s0305048320306824. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.