Two-echelon multi-item spare parts systems with emergency supply flexibility and waiting time constraints |
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Authors: | Hartanto Wong Dirk Van Oudheusden Dirk Cattrysse |
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Affiliation: | a Innovative Manufacturing Research Centre, Cardiff University, Cardiff, Wales, UKb Centre for Industrial Management, Katholieke Universiteit Leuven, Heverlee, Belgium |
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Abstract: | We consider a two-echelon multi-item spare parts inventory system in which supply flexibility through both lateral transshipments and direct deliveries are used in response to stock-outs. We develop a simple heuristic to determine the stocking levels for each type of spare part at the central warehouse and local warehouses minimizing the expected total system cost subject to a target level for the average waiting time across items at each local warehouse. Numerical comparisons between the heuristic's objective function values and lower bounds obtained by applying Lagrangian relaxation techniques show that the heuristic performs well. A study to evaluate the relative merits of a two-echelon system as opposed to a single-echelon system is also presented. We find that the presence of lateral transhipment improves the performance of the single-echelon system considerably. A two-echelon system is only worth implementing when lateral transhipments are not possible. |
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Keywords: | Inventory spare parts two-echelon emergency supply heuristic |
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