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Near-Optimal Service Constrained Stocking Policies for Spare Parts

Author

Listed:
  • Morris A. Cohen

    (University of Pennsylvania, Philadelphia, Pennsylvania)

  • Paul R. Kleindorfer

    (University of Pennsylvania, Philadelphia, Pennsylvania)

  • Hau L. Lee

    (Stanford University, Stanford, California)

Abstract

Consider a facility that stocks various parts in support of repairs for a set of products in some customer region. The problem considered is to determine base stock policies for each part to minimize expected inventory costs across all parts while satisfying some service constraint on total customer repair services completed. A heuristic procedure is developed for several variants of this problem. The heuristic is based on duality theory and is shown to have a close connection to the well known Greedy Heuristic. Encouraging experimental results on the performance of the proposed heuristic are reported. The basic problem structure considered is similar to the tool-kit problem, but it is formulated to allow applications in much broader spare part logistics contexts.

Suggested Citation

  • Morris A. Cohen & Paul R. Kleindorfer & Hau L. Lee, 1989. "Near-Optimal Service Constrained Stocking Policies for Spare Parts," Operations Research, INFORMS, vol. 37(1), pages 104-117, February.
    • Handle: RePEc:inm:oropre:v:37:y:1989:i:1:p:104-117
    DOI: 10.1287/opre.37.1.104
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    Citations

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    Cited by:

    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. 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.
    3. R. Dekker & R.M. Hill & M.J. Kleijn & R.H. Teunter, 2002. "On the (S − 1, S) lost sales inventory model with priority demand classes," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(6), pages 593-610, September.
    4. Yalçın Akçay & Yunke Li & Harihara Prasad Natarajan, 2020. "Category Inventory Planning With Service Level Requirements and Dynamic Substitutions," Production and Operations Management, Production and Operations Management Society, vol. 29(11), pages 2553-2578, November.
    5. Omar Besbes & Adam N. Elmachtoub & Yunjie Sun, 2020. "Pricing Analytics for Rotable Spare Parts," Interfaces, INFORMS, vol. 50(5), pages 313-324, September.
    6. Jeet, Vishv & Kutanoglu, Erhan, 2018. "Part commonality effects on integrated network design and inventory models for low-demand service parts logistics systems," International Journal of Production Economics, Elsevier, vol. 206(C), pages 46-58.
    7. 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.
    8. 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.
    9. Christopher A. Boone & Benjamin T. Hazen & Joseph B. Skipper & Robert E. Overstreet, 2018. "A framework for investigating optimization of service parts performance with big data," Annals of Operations Research, Springer, vol. 270(1), pages 65-74, November.
    10. Kathryn E. Caggiano & Peter L. Jackson & John A. Muckstadt & James A. Rappold, 2007. "Optimizing Service Parts Inventory in a Multiechelon, Multi-Item Supply Chain with Time-Based Customer Service-Level Agreements," Operations Research, INFORMS, vol. 55(2), pages 303-318, April.
    11. Stephen A. Smith & Narendra Agrawal, 2000. "Management of Multi-Item Retail Inventory Systems with Demand Substitution," Operations Research, INFORMS, vol. 48(1), pages 50-64, February.
    12. Dong Li & Nishant Mishra & Serguei Netessine, 2023. "Contracting for Product Support Under Information Asymmetry," Management Science, INFORMS, vol. 69(8), pages 4627-4645, August.

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