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Service Differentiation

In: Spare Parts Inventory Control under System Availability Constraints

Author

Listed:
  • Geert-Jan Houtum

    (Eindhoven University of Technology)

  • Bram Kranenburg

    (Consultants in Quantitative Methods CQM B.V.)

Abstract

As in Chaps. 2 and 3, we analyze a multi-item, single-location inventory model. In this chapter, we assume that the installed base consists of machines of the same machine type, but these machine are classified in multiple machine groups, each with their own target for the aggregate mean waiting time. We again assume that emergency shipments are being used when stockouts occur. For the inventory control of the spare parts, we assume critical level policies. We apply Dantzig-Wolfe decomposition, which gives both a Dantzig-Wolfe heuristic and a corresponding lower bound for the optimal costs, and we describe exact solution procedures for the underlying, single-item inventory problem. In a computational experiment, we show that the Dantzig-Wolfe heuristic performs well, and we compare the use of critical level policies to a so-called round-up policy. The latter comparison is also made in a case study at ASML.

Suggested Citation

  • Geert-Jan Houtum & Bram Kranenburg, 2015. "Service Differentiation," International Series in Operations Research & Management Science, in: Spare Parts Inventory Control under System Availability Constraints, edition 127, chapter 0, pages 71-95, Springer.
    • Handle: RePEc:spr:isochp:978-1-4899-7609-3_4
    DOI: 10.1007/978-1-4899-7609-3_4
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