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

We consider an inventory model for spare parts. Two stockpoints provide 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. Using dynamic programming, we completely characterize and prove the structure of the optimal policy. We also derive conditions under which simple policies are optimal. In addition, we discuss similar inventory models for which we are able to derive the same type of results.