Flexibility in service parts supply chain: a study on emergency resupply in aviation MRO

Recent trends in the commercial aviation industry have resulted in rapidly increasing complexity and decentralisation in service parts logistics systems. As a consequence, MRO service providers tend to adopt more flexible strategies, such as service parts sourcing and demand fulfilment for customers with different service-level requirements. The MRO service providers often enter into cooperative agreements with other service providers to pool inventories, enabling them to increase their flexibility in delivering services to multiple airlines with different contractual terms. Although using cooperative strategies, such as emergency resupply, is useful to increase flexibility, the inherent complexity of optimal mechanism is a critical issue that needs to be further investigated. To this aim, we consider a repairable service parts inventory system with multi-customer classes and develop an optimal emergency resupply policy. Following this, to overcome the intractability issue of finding the optimal policy, an efficient approximation method is proposed. Numerical results indicate that the proposed approximation method is highly accurate, and leads to a significant costs reduction. This paper sheds light on the effectiveness of emergency resupply policy that improves MRO service providers’ flexibility and enables them to ensure responsive service parts inventory.