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Identifying Opportunities for Improving Teradyne's Service-Parts Logistics System

Author

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  • Morris A. Cohen

    (Operations and Information Management, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Yu-Sheng Zheng

    (Operations and Information Management, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Yunzeng Wang

    (School of Business Administration, University of Mississippi, University, Mississippi 38677)

Abstract

Teradyne is a major manufacturer of electronic testing equipment used in semiconductor and electronics assembly plants throughout the world. In a recent project, we evaluated opportunities for improving Teradyne's global service-parts repair and logistics network. This system is complex because of the large number and variety of parts, the geographic dispersion of the installed base of customers' machines, the use of multiple classes of service, and stringent requirements for prompt response to customer requirements. We used basic inventory models to capture key characteristics of the system. These models provided insight into the relative value of several improvement opportunities. Teradyne used these insights to prioritize change options and has successfully implemented several of them. The project's success was, in part, based on the role of a company-academic team that combined understanding of relevant inventory models with in-depth knowledge of logistics processes.

Suggested Citation

  • Morris A. Cohen & Yu-Sheng Zheng & Yunzeng Wang, 1999. "Identifying Opportunities for Improving Teradyne's Service-Parts Logistics System," Interfaces, INFORMS, vol. 29(4), pages 1-18, August.
    • Handle: RePEc:inm:orinte:v:29:y:1999:i:4:p:1-18
    DOI: 10.1287/inte.29.4.1
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    References listed on IDEAS

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    1. 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.
    2. Syntetos, A.A. & Babai, M.Z. & Davies, J. & Stephenson, D., 2010. "Forecasting and stock control: A study in a wholesaling context," International Journal of Production Economics, Elsevier, vol. 127(1), pages 103-111, September.
    3. Solak, Senay & Li, Zhuoxin & Gumus, Mehmet & Zhuo, Yueran, 2024. "A budgeting resource allocation model for capacity expansion," International Journal of Production Economics, Elsevier, vol. 273(C).
    4. Tsai, Shing Chih & Zheng, Ya-Xin, 2013. "A simulation optimization approach for a two-echelon inventory system with service level constraints," European Journal of Operational Research, Elsevier, vol. 229(2), pages 364-374.
    5. Morris A. Cohen & Narendra Agrawal & Vipul Agrawal, 2006. "Achieving Breakthrough Service Delivery Through Dynamic Asset Deployment Strategies," Interfaces, INFORMS, vol. 36(3), pages 259-271, June.
    6. Wang, Yunzeng, 2001. "The optimality of myopic stocking policies for systems with decreasing purchasing prices," European Journal of Operational Research, Elsevier, vol. 133(1), pages 153-159, August.
    7. Marcel A. Sieke & Ralf W. Seifert & Ulrich W. Thonemann, 2012. "Designing Service Level Contracts for Supply Chain Coordination," Production and Operations Management, Production and Operations Management Society, vol. 21(4), pages 698-714, July.
    8. Xiang Fang & Kut C. So & Yunzeng Wang, 2008. "Component Procurement Strategies in Decentralized Assemble-to-Order Systems with Time-Dependent Pricing," Management Science, INFORMS, vol. 54(12), pages 1997-2011, December.
    9. Vinayak Deshpande & Morris A. Cohen & Karen Donohue, 2003. "An Empirical Study of Service Differentiation for Weapon System Service Parts," Operations Research, INFORMS, vol. 51(4), pages 518-530, August.
    10. Yunzeng Wang & Morris A. Cohen & Yu-Sheng Zheng, 2000. "A Two-Echelon Repairable Inventory System with Stocking-Center-Dependent Depot Replenishment Lead Times," Management Science, INFORMS, vol. 46(11), pages 1441-1453, November.
    11. 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.
    12. Du, Bisheng & Larsen, Christian, 2011. "Base stock policies with degraded service to larger orders," International Journal of Production Economics, Elsevier, vol. 133(1), pages 326-333, September.
    13. Katarzyna Grondys & Iga Kott & Anna Wiœniewska-Sa³ek, 2014. "Entrepreneurship As An Opportunity Of Development For Industrial Companies Using Logistics Centers," Polish Journal of Management Studies, Czestochowa Technical University, Department of Management, vol. 10(1), pages 45-53, December.
    14. Vinayak Deshpande & Ananth V. Iyer & Richard Cho, 2006. "Efficient Supply Chain Management at the U.S. Coast Guard Using Part-Age Dependent Supply Replenishment Policies," Operations Research, INFORMS, vol. 54(6), pages 1028-1040, December.
    15. F. Tevhide Altekin & Ezgi Aylı & Güvenç Şahin, 2017. "After-sales services network design of a household appliances manufacturer," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(9), pages 1056-1067, September.
    16. Candas, Mehmet Ferhat & Kutanoglu, Erhan, 2020. "Integrated location and inventory planning in service parts logistics with customer-based service levels," European Journal of Operational Research, Elsevier, vol. 285(1), pages 279-295.
    17. Du, Bisheng & Larsen, Christian, 2008. "Base stock policies with degraded service to larger orders," CORAL Working Papers L-2008-07, University of Aarhus, Aarhus School of Business, Department of Business Studies.

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