IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v181y2016ipap58-67.html
   My bibliography  Save this article

Allocating service parts in two-echelon networks at a utility company

Author

Listed:
  • van den Berg, D.
  • van der Heijden, M.C.
  • Schuur, P.C.

Abstract

We study a multi-item, two-echelon, continuous-review inventory problem at a Dutch utility company. We develop a model for the optimal allocation of service parts in a two-echelon network under an aggregate waiting time constraint. Specific model aspects are emergency shipments in case of stockout, and batching for regular replenishment orders at the central warehouse. We use column generation to solve this problem with various building blocks for single-item models as columns. Further, we derive simple classification rules from the solution of our multi-item, two-echelon service part optimization problem using statistical techniques. Application of our models at Liander yields a cost reduction of 15% and a decrease in the impact of waiting time for service parts by 52%.

Suggested Citation

  • van den Berg, D. & van der Heijden, M.C. & Schuur, P.C., 2016. "Allocating service parts in two-echelon networks at a utility company," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 58-67.
    • Handle: RePEc:eee:proeco:v:181:y:2016:i:pa:p:58-67
    DOI: 10.1016/j.ijpe.2015.08.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527315003217
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2015.08.025?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. Elisa Alvarez & Matthieu Heijden & W. Zijm, 2015. "Service differentiation in spare parts supply through dedicated stocks," Annals of Operations Research, Springer, vol. 231(1), pages 283-303, August.
    2. Craig C. Sherbrooke, 1968. "Metric: A Multi-Echelon Technique for Recoverable Item Control," Operations Research, INFORMS, vol. 16(1), pages 122-141, February.
    3. Alvarez, E.M. & van der Heijden, M.C. & Zijm, W.H.M., 2013. "The selective use of emergency shipments for service-contract differentiation," International Journal of Production Economics, Elsevier, vol. 143(2), pages 518-526.
    4. Andersson, Jonas & Melchiors, Philip, 2001. "A two-echelon inventory model with lost sales," International Journal of Production Economics, Elsevier, vol. 69(3), pages 307-315, February.
    5. Erhun Özkan & Geert-Jan Houtum & Yasemin Serin, 2015. "A new approximate evaluation method for two-echelon inventory systems with emergency shipments," Annals of Operations Research, Springer, vol. 224(1), pages 147-169, January.
    6. Bijvank, Marco & Vis, Iris F.A., 2011. "Lost-sales inventory theory: A review," European Journal of Operational Research, Elsevier, vol. 215(1), pages 1-13, November.
    7. John A. Muckstadt & L. Joseph Thomas, 1980. "Are Multi-Echelon Inventory Methods Worth Implementing in Systems with Low-Demand-Rate Items?," Management Science, INFORMS, vol. 26(5), pages 483-494, May.
    8. Alvarez, Elisa & van der Heijden, Matthieu, 2014. "On two-echelon inventory systems with Poisson demand and lost sales," European Journal of Operational Research, Elsevier, vol. 235(1), pages 334-338.
    9. A A Kranenburg & G J van Houtum, 2008. "Service differentiation in spare parts inventory management," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(7), pages 946-955, July.
    10. Patrik Alfredsson & Jos Verrijdt, 1999. "Modeling Emergency Supply Flexibility in a Two-Echelon Inventory System," Management Science, INFORMS, vol. 45(10), pages 1416-1431, October.
    11. Alper Şen & Deepak Bhatia & Koray Doğan, 2010. "Applied Materials Uses Operations Research to Design Its Service and Parts Network," Interfaces, INFORMS, vol. 40(4), pages 253-266, August.
    12. Kranenburg, A.A. & Van Houtum, G.J., 2007. "Effect of commonality on spare parts provisioning costs for capital goods," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 221-227, July.
    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. 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.
    2. Tavakoli Kafiabad, Shayan & Zanjani, Masoumeh Kazemi & Nourelfath, Mustapha, 2022. "Robust collaborative maintenance logistics network design and planning," International Journal of Production Economics, Elsevier, vol. 244(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. 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.
    2. van Wingerden, E. & Tan, T. & Van Houtum, G.J., 2019. "The impact of an emergency warehouse in a two-echelon spare parts network," European Journal of Operational Research, Elsevier, vol. 276(3), pages 983-997.
    3. Elisa Alvarez & Matthieu Heijden & W. Zijm, 2015. "Service differentiation in spare parts supply through dedicated stocks," Annals of Operations Research, Springer, vol. 231(1), pages 283-303, August.
    4. Arts, Joachim, 2017. "A multi-item approach to repairable stocking and expediting in a fluctuating demand environment," European Journal of Operational Research, Elsevier, vol. 256(1), pages 102-115.
    5. Johansson, Lina & Olsson, Fredrik, 2018. "Age-based inventory control in a multi-echelon system with emergency replenishments," European Journal of Operational Research, Elsevier, vol. 265(3), pages 951-961.
    6. Kouki, Chaaben & Arts, Joachim & Babai, M. Zied, 2024. "Performance evaluation of a two-echelon inventory system with network lost sales," European Journal of Operational Research, Elsevier, vol. 314(2), pages 647-664.
    7. Christiane B. Haubitz & Ulrich W. Thonemann, 2021. "How to Change a Running System—Controlling the Transition to Optimized Spare Parts Inventory Policies," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1386-1405, May.
    8. Erhun Özkan & Geert-Jan Houtum & Yasemin Serin, 2015. "A new approximate evaluation method for two-echelon inventory systems with emergency shipments," Annals of Operations Research, Springer, vol. 224(1), pages 147-169, January.
    9. Alvarez, E.M. & van der Heijden, M.C. & Zijm, W.H.M., 2013. "The selective use of emergency shipments for service-contract differentiation," International Journal of Production Economics, Elsevier, vol. 143(2), pages 518-526.
    10. Alvarez, Elisa & van der Heijden, Matthieu, 2014. "On two-echelon inventory systems with Poisson demand and lost sales," European Journal of Operational Research, Elsevier, vol. 235(1), pages 334-338.
    11. Alvarez, E.M. & van der Heijden, M.C. & Vliegen, I.M.H. & Zijm, W.H.M., 2014. "Service differentiation through selective lateral transshipments," European Journal of Operational Research, Elsevier, vol. 237(3), pages 824-835.
    12. Kutanoglu, Erhan & Mahajan, Mohit, 2009. "An inventory sharing and allocation method for a multi-location service parts logistics network with time-based service levels," European Journal of Operational Research, Elsevier, vol. 194(3), pages 728-742, May.
    13. Van der Heide, G. & Van Foreest, N.D. & Roodbergen, K.J., 2018. "Optimizing stock levels for rental systems with a support warehouse and partial backordering," European Journal of Operational Research, Elsevier, vol. 265(1), pages 107-118.
    14. Hill, R.M. & Seifbarghy, M. & Smith, D.K., 2007. "A two-echelon inventory model with lost sales," European Journal of Operational Research, Elsevier, vol. 181(2), pages 753-766, September.
    15. Al Hanbali, Ahmad & van der Heijden, Matthieu, 2013. "Interval availability analysis of a two-echelon, multi-item system," European Journal of Operational Research, Elsevier, vol. 228(3), pages 494-503.
    16. Gabor, A.F. & Guang, Y. & Axsäter, S., 2014. "Comparison of two methods for customer differentiation," ERIM Report Series Research in Management ERS-2014-003-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    17. N. Knofius & M. C. Heijden & A. Sleptchenko & W. H. M. Zijm, 2021. "Improving effectiveness of spare parts supply by additive manufacturing as dual sourcing option," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 43(1), pages 189-221, March.
    18. 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.
    19. Paterson, Colin & Kiesmüller, Gudrun & Teunter, Ruud & Glazebrook, Kevin, 2011. "Inventory models with lateral transshipments: A review," European Journal of Operational Research, Elsevier, vol. 210(2), pages 125-136, April.
    20. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.

    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:proeco:v:181:y:2016:i:pa:p:58-67. 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/locate/ijpe .

    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.