Optimal lateral transshipment policies in spare parts inventory models (original) (raw)

Reducing the mean supply delay of spare parts using lateral transshipments policies

International Journal of Production Economics, 2011

Lateral transshipment has been studied lately as a promising policy for increasing the performances of multi-echelon spare parts inventory system. By lateral transshipment spare parts can be moved from one location with excess inventory to another location, at the same echelon, in shortage, with the aim of reducing supply delays of spare parts. This paper examine the relative effectiveness of two lateral shipments approaches in reducing the mean supply delay (MSD) of a non repairable item, with respect to a classical policy of no lateral shipments. A simulation model of a two echelon supply network has been implemented and an experiment has been performed by varying different parameters of the supply network, such as the number of warehouses (locations at the lower echelon), the supply lead time from the central depot, the spare parts demand uncertainty, and the size variability of the warehouses. Results show appreciable reductions of MSD when lateral shipments are allowed with respect to the classical policy, in almost every network configuration.

Multi-item spare parts systems with lateral transshipments and waiting time constraints

European Journal of Operational Research, 2006

This paper deals with the analysis of a multi-item, continuous review model of two-location inventory systems for repairable spare parts in which lateral and emergency shipments occur in response to stockouts. A continuous review basestock policy is assumed for the inventory control of the spare parts. The objective is to minimize the total costs for inventory holding, lateral transshipments and emergency shipments subject to a target level for the average waiting time at each of the two locations. A solution procedure based on Lagrangian relaxation is developed to obtain both a lower bound and an upper bound of the optimal total costs. The upper bound follows from a heuristic solution. An extensive numerical experiment shows an average gap of only 0.77% between the best obtained lower and upper bounds. It also gives insights into the relative improvement achieved when moving from a no-pooling policy to a pooling policy and when moving from an item approach to a system approach. We also applied the model to actual data from an air carrier company.

A Two-Echelon Spare Parts Network with Lateral and Emergency Shipments: A Product-Form Approximation

Probability in the Engineering and Informational Sciences

We consider a single-item, two-echelon spare parts inventory model for repairable parts for capital goods with high downtime costs. The inventory system consists of multiple local warehouses, a central warehouse, and a central repair facility. When a part at a customer fails, if possible his request for a ready-for-use part is fulfilled by his local warehouse. Also, the failed part is sent to the central repair facility for repair. If the local warehouse is out of stock, then, via an emergency shipment, a ready-for-use part is sent from the central warehouse if it has a part in stock. Otherwise, it is sent via a lateral transshipment from another local warehouse, or via an emergency shipment from the external supplier. We assume Poisson demand processes, generally distributed leadtimes for replenishments, repairs, and emergency shipments, and a basestock policy for the inventory control. Our inventory system is too complex to solve for a steady-state distribution in closed form. We ...

Meeting Correlated Spare Part Demands with Optimal Transshipments

International Journal of Strategic Decision Sciences, 2010

This paper studies spare part transshipments between two service part facilities whose demands are correlated. Transshipments are used to reduce severity of part stock outs. Facilities are run by an inventory manager (IM) who minimizes replenishment, transshipment, and inventory costs. We show that the optimal transshipment policy is an inventory hold-back type; if the part inventory at a facility is less than or equal to its hold-back level, a transshipment request made for that part by a stocked out retailer is rejected. The hold-back levels increase toward the next replenishment of partsThis implies that transshipment requests are initially accepted until a critical time and afterwards they are rejected. A heuristic is designed using this critical time as the single decision variable. It performs within 0.7-1.8% of the optimal cost. Heuristic policies of no inventory sharing and complete sharing, respectively, perform within 3% and 2% of the optimal cost. Since the computation of...

Optimal lateral transshipment policy for a two location inventory problem

"We consider an inventory model for spare parts with two stockpoints, providing repairable parts for a critical component of advanced technical systems. As downtime costs for these systems are huge, ready-for-use spare parts are kept on stock, to be able to quickly respond to a breakdown of a system. We allow for lateral transshipments of parts between the stockpoints upon a demand arrival for a spare part. We are interested in the optimal lateral transshipment policy. We consider a continuous review setting, where the initial number of spare parts at each location is given. We assume Poisson demand processes, and allow for asymmetric demand rates and asymmetric costs structures at the two locations. Defective parts are replaced, and returned to the stockpoint for repair. Each location has ample repair capacity, and repair times are exponentially distributed, with the same mean repair time for both locations. Demands are satisfied from own stock, via a lateral transshipment, or via an emergency procedure. Using dynamic programming, we completely characterize and prove the structure of the optimal lateral transshipment policy, that is, the policy for satisfying demands, minimizing the long-run average costs of the system. This optimal policy is a threshold type policy. In addition, we derive conditions under which the so-called hold back and complete pooling policies are optimal, which are both policies that are often assumed in the literature. _____________________________________________ Wijk, A.C.C. van, Adan, I.J.B.F., Houtum, G.J.J.A.N. van (2009). Optimal lateral transshipment policy for a two location inventory problem. Eurandom Report No. 2009-027, Eindhoven: Eurandom, 30 pp."

Service Parts Inventory Control with Lateral Transshipment that Takes Time

2010

In equipment-intensive industries such as truck manufacturing, electronics manufacturing, photo copiers, and airliners, service parts are often slow moving items for which, in some cases, the transshipment time is not negligible. However, this aspect is hardly considered in the existing spare parts literature. We assess the effect of non-negligible lateral transshipment time on various aspects of spare parts inventory control. Furthermore, we introduce customer-oriented service levels by taking the uncommitted pipeline stocks into account. A case study in the dredging industry shows that lateral transshipment may lead to lower system performance, which supports the results from some recent studies. Furthermore, we find that considerable savings can be obtained when we include the uncommitted pipeline stocks in both base stock allocation and lateral transshipment decisions.

REPAIRABLE SPARE PARTS FLOW IN A MULTI-ECHELON INVENTORY SYSTEM

This paper considers the problem of changing the value of selected characteristics for the operation of a two-level inventory system of maintainable parts depending on the flow of regenerated components in the inventory system. We analyzed the influence of the flow of regenerated components on the value of the coefficient of peripheral storage fill-rate, total costs and the average waiting time in the queue in peripheral warehouses, at different nominal values of the stocks in central and peripheral warehouses. The demand for spare parts in the peripheral warehouses is dependent on seasonal changes, modeled with an appopriate probability distribution.

Two-Echelon Inventory Model With Service Consideration and Lateral Transshipment

WSEAS TRANSACTIONS ON SYSTEMS

This paper considers a two-echelon inventory system with service consideration and lateral transshipment. So far, researchers have not extensively considered the use of lateral transshipment for such systems. Demand arrivals at both echelons follow the Poisson process. We introduce a continuous review base stock policy for the system in steady state, which determined the expected level for on-hand inventory, expected lateral transshipment level and expected backorder level. We showed that the model satisfied convexity with respect to base stock level. Computational experiments showed that the model with lateral transshipment performed better that the model without lateral transshipment.

Optimal Stocking in Reparable Parts Networks with Repair Capacity and Inventory Pooling

This paper addresses a tactical planning problem for a three-echelon, reparable-parts service network characterized by a capacitated repair facility and local opportunities for inventory pooling. The problem is to find the optimal total system stock. The model proposed is appropriate for high-cost, high-criticality, low-demand-rate parts for which transport times are short and for which optimization-based stock allocation is performed in the distribution system. The model includes parameters that characterize design and management decisions in the resupply system. The model can be solved in time that is nlog(n) in the number of part number-location combinations, making it a practical technique for large-scale inventory problems. One implication of this approach is to emphasize the importance of optimization-based stock allocation and repair priority routines in inventory management execution systems.