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Multi-item two-echelon spare parts inventory control problem with batch ordering in the central warehouse under compound Poisson demand

Author

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  • E Topan

    (199;ankaya University, Ankara, Turkey)

  • Z P Bayindir

    (Middle East Technical University, Ankara, Turkey)

Abstract

We consider a multi-item two-echelon spare part inventory system in which the central warehouse operates under an (nQ, R) policy and the local warehouses implement order-up-to S policy, each facing a compound Poisson demand. The objective is to find the policy parameters minimizing expected system-wide inventory holding and fixed ordering costs subject to an aggregate mean response time constraint at each warehouse. In this paper, we propose four alternative approximations for the steady state performance of the system; and extend a heuristic and a lower bound proposed under Poisson demand assumption to the compound Poisson setting. In a computational study, we show that the performances of the approximations, the heuristic, and the lower bound are quite satisfactory; and the relative cost saving of setting an aggregate service level rather than individually for each part is quite high.

Suggested Citation

  • E Topan & Z P Bayindir, 2012. "Multi-item two-echelon spare parts inventory control problem with batch ordering in the central warehouse under compound Poisson demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(8), pages 1143-1152, August.
    • Handle: RePEc:pal:jorsoc:v:63:y:2012:i:8:p:1143-1152
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    Cited by:

    1. Yu-kun Chen & Qi Gao & Xiao-bo Su & Shun Fang & Chi-ming Guo, 2018. "Research on optimization of spare parts inventory policy considering maintenance priority," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 9(6), pages 1336-1345, December.
    2. Topan, Engin & Bayındır, Z. Pelin & Tan, Tarkan, 2017. "Heuristics for multi-item two-echelon spare parts inventory control subject to aggregate and individual service measures," European Journal of Operational Research, Elsevier, vol. 256(1), pages 126-138.
    3. 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.

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