24 research outputs found

    Multilocation Inventory Systems With Centralized Information.

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    The management of multi-echelon inventory systems has been both an important and challenging research area for many years. The rapid advance in information technology and the emphasis on integrated supply chain management have new implications for the successful operation of distribution systems. This research focuses on the study of some fundamental issues related to the operation of a multilocation inventory system with centralized information. First, we do a comparative analysis to evaluate the overall performance of individual versus centralized ordering policies for a multi-store distribution system where centralized information is available. This study integrates the existing research and clarifies one of the fundamental questions facing inventory managers today: whether or not ordering decisions should be centralized. Next, we consider a multi-store distribution system where emergency transshipments are permitted among these stores. Based on some simplifying assumptions, we develop an integrated model with a joint consideration of inventory and transshipment components. An approximately optimal (s, S) policy is obtained through a dynamic programming technique. This ordering policy is then compared with a simplified policy that assumes free and instantaneous transshipments. We also examine the relative performance of base stock policies for a centralized-ordering distribution system. Numerical studies are provided to give general guidelines for use of the policies

    Inventory models with lateral transshipments : a review

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    Lateral transshipments within an inventory system are stock movements between locations of the same echelon. These transshipments can be conducted periodically at predetermined points in time to proactively redistribute stock, or they can be used reactively as a method of meeting demand which cannot be satised from stock on hand. The elements of an inventory system considered, e.g. size, cost structures and service level denition, all in uence the best method of transshipping. Models of many dierent systems have been considered. This paper provides a literature review which categorizes the research to date on lateral transshipments, so that these dierences can be understood and gaps within the literature can be identied

    Multi-Echelon Models for Repairable Items: A Review

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    We review multi-echelon inventory models for repairable items. Such models have been widely applied to the management of critical spare parts for military equipment for around three decades, but the application to manufacturing and service industries seems to be much less documented. We feel that the appropriate use of models in the management of spare parts for heavily utilized equipment in industry can result in significant cost savings, in particular in those settings where repair facilities are resource constrained. In our review, we provide a strategic framework for making these decisions, place the modeling problem in the broader context of inventory control, and review the prominent models in the literature under a unified setting, highlighting some key relationships. We concentrate on describing those models which we feel are most applicable for practical application, revisiting in detail the Multi-Echelon Technique for Recoverable Item Control (METRIC) model and its variations, and then discussing a variety of more general queueing models. We then discuss the components which we feel must be addressed in the models in order to apply them practically to industrial settings

    Stock Optimization in Emergency Resupply Networks under Stuttering Poisson Demand

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    We consider a network in which field stocking locations (FSLs) manage multiple parts according to an (S-1,S) policy. Demand processes for the parts are assumed to be independent stuttering Poisson processes. Regular replenishments to an FSL occur from a regional stocking location (RSL) that has an unlimited supply of each part type. Demand in excess of supply at an FSL is routed to an emergency stocking location (ESL), which also employs an (S-1,S) policy to manage its inventory. Demand in excess of supply at the ESL is backordered. Lead time from the ESL to each FSL is assumed to be negligible compared to the RSL-ESL resupply time. In companion papers we have shown how to approximate the joint probability distributions of units on hand, units in regular resupply, and units in emergency resupply. In this paper, we focus on the problem of determining the stock levels at the FSLs and ESL across all part numbers that minimize backorder, and emergency resupply costs subject to an inventory investment budget constraint. The problem is shown to be a nonconvex integer programming problem, and we explore a collection of heuristics for solving the optimization problem

    Multiobjective Coordination Models For Maintenance And Service Parts Inventory Planning And Control

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    In many equipment-intensive organizations in the manufacturing, service and particularly the defense sectors, service parts inventories constitute a significant source of tactical and operational costs and consume a significant portion of capital investment. For instance, the Defense Logistics Agency manages about 4 million consumable service parts and provides about 93% of all consumable service parts used by the military services. These items required about US1.9billionoverthefiscalyears1999−2002.Duringthesametime,theUSGeneralAccountabilityOfficediscoveredthat,intheUnitedStatesNavy,therewereabout3.7billionshipandsubmarinepartsthatwerenotneeded.TheFederalAviationAdministrationsaysthat26millionaircraftpartsarechangedeachyear.In2002,theholdingcostofservicepartsfortheaviationindustrywasestimatedtobeUS1.9 billion over the fiscal years 1999-2002. During the same time, the US General Accountability Office discovered that, in the United States Navy, there were about 3.7 billion ship and submarine parts that were not needed. The Federal Aviation Administration says that 26 million aircraft parts are changed each year. In 2002, the holding cost of service parts for the aviation industry was estimated to be US50 billion. The US Army Institute of Land Warfare reports that, at the beginning of the 2003 fiscal year, prior to Operation Iraqi Freedom the aviation service parts alone was in excess of US1billion.Thissituationmakesthemanagementoftheseitemsaverycriticaltacticalandstrategicissuethatisworthyoffurtherstudy.Thekeychallengeistomaintainhighequipmentavailabilitywithlowservicecost(e.g.,holding,warehousing,transportation,technicians,overhead,etc.).Forinstance,despitereportingUS1 billion. This situation makes the management of these items a very critical tactical and strategic issue that is worthy of further study. The key challenge is to maintain high equipment availability with low service cost (e.g., holding, warehousing, transportation, technicians, overhead, etc.). For instance, despite reporting US10.5 billion in appropriations spent on purchasing service parts in 2000, the United States Air Force (USAF) continues to report shortages of service parts. The USAF estimates that, if the investment on service parts decreases to about US$5.3 billion, weapons systems availability would range from 73 to 100 percent. Thus, better management of service parts inventories should create opportunities for cost savings caused by the efficient management of these inventories. Unfortunately, service parts belong to a class of inventory that continually makes them difficult to manage. Moreover, it can be said that the general function of service parts inventories is to support maintenance actions; therefore, service parts inventory policies are highly related to the resident maintenance policies. However, the interrelationship between service parts inventory management and maintenance policies is often overlooked, both in practice and in the academic literature, when it comes to optimizing maintenance and service parts inventory policies. Hence, there exists a great divide between maintenance and service parts inventory theory and practice. This research investigation specifically considers the aspect of joint maintenance and service part inventory optimization. We decompose the joint maintenance and service part inventory optimization problem into the supplier s problem and the customer s problem. Long-run expected cost functions for each problem that include the most common maintenance cost parameters and service parts inventory cost parameters are presented. Computational experiments are conducted for a single-supplier two-echelon service parts supply chain configuration varying the number of customers in the network. Lateral transshipments (LTs) of service parts between customers are not allowed. For this configuration, we optimize the cost functions using a traditional, or decoupled, approach, where each supply chain entity optimizes its cost individually, and a joint approach, where the cost objectives of both the supplier and customers are optimized simultaneously. We show that the multiple objective optimization approach outperforms the traditional decoupled optimization approach by generating lower system-wide supply chain network costs. The model formulations are extended by relaxing the assumption of no LTs between customers in the supply chain network. Similar to those for the no LTs configuration, the results for the LTs configuration show that the multiobjective optimization outperforms the decoupled optimization in terms of system-wide cost. Hence, it is economically beneficial to jointly consider all parties within the supply network. Further, we compare the model configurations LTs versus no LTs, and we show that using LTs improves the overall savings of the system. It is observed that the improvement is mostly derived from reduced shortage costs since the equipment downtime is reduced due to the proximity of the supply. The models and results of this research have significant practical implications as they can be used to assist decision-makers to determine when and where to pre-position parts inventories to maximize equipment availability. Furthermore, these models can assist in the preparation of the terms of long-term service agreements and maintenance contracts between original equipment manufacturers and their customers (i.e., equipment owners and/or operators), including determining the equitable allocation of all system-wide cost savings under the agreement

    Performance Evaluation of Stochastic Multi-Echelon Inventory Systems: A Survey

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    Globalization, product proliferation, and fast product innovation have significantly increased the complexities of supply chains in many industries. One of the most important advancements of supply chain management in recent years is the development of models and methodologies for controlling inventory in general supply networks under uncertainty and their widefspread applications to industry. These developments are based on three generic methods: the queueing-inventory method, the lead-time demand method and the flow-unit method. In this paper, we compare and contrast these methods by discussing their strengths and weaknesses, their differences and connections, and showing how to apply them systematically to characterize and evaluate various supply networks with different supply processes, inventory policies, and demand processes. Our objective is to forge links among research strands on different methods and various network topologies so as to develop unified methodologies.Masdar Institute of Science and TechnologyNational Science Foundation (U.S.) (NSF Contract CMMI-0758069)National Science Foundation (U.S.) (Career Award CMMI-0747779)Bayer Business ServicesSAP A

    Hybrid Lateral Transshipments in a Multi-Location Inventory System

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    In managing networks of stock holding locations, two approaches to the pooling of inventory have been proposed. Reactive transshipm nts respond to stockouts at a location by moving inventory from elsewhere within the network, while proactive redistribution of stock seeks to minimise the chance of future shocks. This paper is the first to propose a hybrid approach in which transshipments are viewed as an opportunity for stock redistribution. We adopt a quasi-myopic approach to the development of a strongly performing hybrid transshipment policy. Numerical studies which utilise dynamic programming and simulation testify to the benefits of using transshipments proactively. In comparison to a purely reactive approach to transshipment, service levels are improved while a reduction in safety stock levels is achieved. The aggregate costs incurred in managing the system are significantly reduced, especially so for large networks facing high levels of demand.

    Performance Analysis of Multi-Echelon Inventory Systems.

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    A two-echelon inventory and distribution system consisting of a centralized warehouse and N stores is considered in this paper. The inventories of the warehouse as well as the stores are controlled by periodic review (s,S) ordering policies. The expected levels of capital investment, storage space needs, capacity requirements for delivery vehicles, and reliable customer service are issues of great importance to practitioners when considering the introduction of a central warehouse and transportation system. Helmut Schneider, Dan Rinks, and Peter Kelle have developed a methodology that has been shown to provide approximately optimal (s,S) policies under various demand conditions, and are easy to handle computationally. The approximations of Schneider et al., are used to generate ordering policies for the two-echelon system in order to observe the behavior of the aggregate inventories generated by the (s,S) policies using computer simulation. The simulation results are used to evaluate the accuracy of the analytic models in predicting the aggregate inventory behavior, and simple computational formulas are proposed to calculate confidence limits for aggregate inventory levels and for shipping volumes and weights

    Service Inventory Management : Solution techniques for inventory systems without backorders

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    Koole, G.M. [Promotor]Vis, I.F.A. [Copromotor
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