Development of Availability and Sustainability Spares Optimization Models for Aircraft Reparables

The Republic of Singapore Air Force (RSAF) conducts Logistics Support Analysis (LSA) studies in various engineering and logistics efforts on the myriad of weapon systems. In these studies, inventory spares provisioning, availability and sustainability analyses are key focus areas to ensure asset sustenance. In particular, OPUS10, a commercial-off-the-shelf software, is extensively used to conduct reparable spares optimization in acquisition programs. However, it is limited in its ability to conduct availability and sustainability analyses of time-varying operational demands, crucial in Operations & Support (O&S) and contingency planning. As the RSAF seeks force structure expansion to include more sophisticated weapon systems, the operating environment will become more complex. Agile and responsive logistics solutions are needed to ensure the RSAF engineering community consistently pushes for deepening competencies, particularly in LSA capabilities. This research is aimed at the development of a model solution that combines optimization and sustainability capabilities to meet the dynamic requirements in O&S and contingency planning. In particular, a unique dynamic operational profile conversion model was developed to realize these capabilities. It is envisaged that the research would afford the ease of use, versatility, speed and accuracy required in LSA studies, to provide the necessary edge in inventory reparable spares modeling

The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

Environmental and Economic Benefits of using Multi-Echelon Inventory Control

Summary This master thesis evaluates the benefits of using multi-echelon control instead of single-echelon control of a multi-echelon inventory system. The multi-echelon inventory system studied in this thesis is a one-warehousemultiple- retailer inventory system. Multi-echelon inventory control is defined as a method to optimize the inventory system by taking the interdependencies between different stock locations in the system into consideration. Single-echelon control on the other hand is defined as optimizing each stock point in isolation and disregarding the interdependencies that exists. There has been extensive research in this area, and the fact that large potential cost reductions exist is well documented. However, little research has been performed to evaluate the environmental benefits that can be rendered by implementing multiechelon inventory control. The purpose of this master thesis is to evaluate the environmental and economic benefits of using a more advanced multi-echelon control method in a real case instead of the commercial single-echelon control method currently used. The hypothesis is that by fulfilling the fill-rates better, the amount of emergency orders can be reduced significantly, and by this also the total CO2-emissions can be reduced. The company studied is Lantmännen Maskin AB (LM) who provides their retailers in Sweden, Norway and Denmark with spare parts for agricultural machinery. The methodology used have been that of an operations research study where both mathematical models and simulations have been used. As a base model a commercial single-echelon model currently used at Lantmännen Maskin has been used, called SCP in this thesis. This model was compared to a more sophisticated multi-echelon model developed at Production Management, Lund University, Faculty of Engineering by Berling and Marklund (2012;2013), called MEM in this thesis. The approach of the project can be divided into five steps; first the data from the case company was gathered. Secondly, an existing simulation model was extended to fit the needs of this study. Thirdly, a stratified sampling was performed on the gathered data to find a representative sample of the case company’s items. Fourthly, the inventory system was optimized with SCP and MEM respectively. Finally, the results from the SCP-model and the MEM-model was simulated and compared. The results show that the average fill-rate was increased with 8.3% from 92.0% to 99.6%, the holding costs went down with 18.1% and the CO2- emissions were reduced with 57.0%. Further, the MEM model shows to be more consistent on achieving target fill-rate, whereas the SCP model varies a lot and delivers some fill-rates which are well below target and some that are above. Sensitivity analysis of the results concerning the CO2-emissions shows that for this case study the emergency orders sent by air do not affect the system very much. The reason is that the emergency transports by air are very few compared to the ones sent by truck. To really examine the benefits that could be achieved with the MEM model compared to the SCP model, a modified case set up was investigated where all emergency orders were assumed to be sent by air. In this case the reduction of CO2-emissions can be as high as 90%. Another important aspect found during this thesis concerning the CO2-emissions is that certain item attributes can make some items affect the CO2-emissions of the whole system in a non-proportional way. Two important factors were found, weight and mean demand. All CO2-emissions are linearly dependent on the weight, and consequently, this is a very important factor. But the second factor has even more influence. The reason for this is that if the mean demand for an item is high compared to other items then this item can have relatively many emergency orders even if the fill-rate is high. This was found during the study where one item, which had a high fill-rate, emitted CO2-emissions equivalent to 68% of the CO2-emissions of all of the studied items. Consequently, the conclusion from the results is that implementing the MEM model instead of the SCP model will reduce the environmental impact. Further, there are other aspects which are important to consider; firstly the MEM model will be more consistent on achieving target fillrates than the SCP model, secondly the reduction of CO2-will be greater in a system using air transport for emergency orders instead of land transport, and finally, the weight and mean demand are important aspects to consider if the environmental impact is to be reduced

Ensaios sobre flexibilidade da cadeia de abastecimento: uma abordagem de opções reais

Doutoramento em Gestão IndustrialA presente tese investiga o processo de tomada de decisão na gestão de cadeias de abastecimento, utilizando um quadro de análise de opções reais. Especificamente, estudamos tópicos como o nível de inventário ideal para protecção contra a incerteza da procura, o momento para implementação de capacidade flexível em mercados onde existe complexidade no mix de produtos, o tempo para o reforço do factor trabalho visando requisitos de serviço ao mercado, e as decisões entre integração e outsourcing num ambiente de incerteza. Foram usadas metodologias de tempo discreto e contínuo para identificar o valor ideal e o calendário das opções a adoptar, quando a procura é estocástica. Além disso, foram considerados os efeitos dos requisitos dos mercados, como a complexidade na oferta de produtos e o nível de serviço. A procura é representada recorrendo a diferentes processos estocásticos, o impacto de saltos inesperados também é explorado, reforçando a generalização dos modelos a diferentes condições de negócio. A aplicabilidade dos modelos que apresentamos permite a diversificação e o enriquecimento da literatura sobre a abordagem de opções reais, no âmbito das cadeias de abastecimento. Níveis de inventário flexíveis e capacidades flexíveis são característicos das cadeias de abastecimento e podem ser usados como resposta à incerteza do mercado. Esta tese é constituída por ensaios que suportam a aplicação dos modelos, e consiste num capítulo introdutório (designado por ensaio I) e mais seis ensaios sobre factores que discutem o uso de medidas de flexibilidade nas cadeias de abastecimento, em ambientes de incerteza, e um último ensaio sobre a extensão do conceito de flexibilidade ao tratamento da avaliação de planos de negócio. O segundo ensaio que apresentamos é sobre o valor do inventário num único estádio, enquanto medida de flexibilidade, sujeita ao crescente condicionalismo dos custos com posse de activos. Introduzimos uma nova classificação de artigos para suportar o indicador designado por overstock. No terceiro e quarto ensaio ampliamos a exploração do conceito de overstock, promovendo a interacção e o balanceamento entre vários estádios de uma cadeia de abastecimento, como forma de melhorar o desempenho global. Para sustentar a aplicação prática das abordagens, adaptamos o ensaio número três à gestão do desempenho, para suportar o estabelecimento de metas coordenadas e alinhadas; e adaptamos o quarto ensaio à coordenação das cadeias de abastecimento, como auxiliar ao planeamento integrado e sequencial dos níveis de inventário. No ensaio cinco analisamos o factor de produção “tecnologia”, em relação directa com a oferta de produtos de uma empresa, explorando o conceito de investimento, como medida de flexibilidade nas componentes de volume da procura e gama de produtos. Dedicamos o ensaio número seis à análise do factor de produção “Mão-de-Obra”, explorando as condicionantes para aumento do número de turnos na perspectiva económica e determinando o ponto crítico para a tomada de decisão em ambientes de incerteza. No ensaio número sete exploramos o conceito de internalização de operações, demarcando a nossa análise das demais pela definição do momento crítico que suporta a tomada de decisão em ambientes dinâmicos. Complementamos a análise com a introdução de factores temporais de perturbação, nomeadamente, o estádio de preparação necessário e anterior a uma eventual alteração de estratégia. Finalmente, no último ensaio, estendemos a análise da flexibilidade em ambientes de incerteza ao conceito de planos de negócio. Em concreto, exploramos a influência do número de pontos de decisão na flexibilidade de um plano, como resposta à crescente incerteza dos mercados. A título de exemplo, usamos o mecanismo de gestão sequencial do orçamento para suportar o nosso modelo. A crescente incerteza da procura obrigou a um aumento da agilidade e da flexibilidade das cadeias de abastecimento, limitando o uso de muitas das técnicas tradicionais de suporte à gestão, pela incapacidade de incorporarem os efeitos da incerteza. A flexibilidade é claramente uma vantagem competitiva das empresas que deve, por isso, ser quantificada. Com os modelos apresentados e com base nos resultados analisados, pretendemos demonstrar a utilidade da consideração da incerteza nos instrumentos de gestão, usando exemplos numéricos para suportar a aplicação dos modelos, o que claramente promove a aproximação dos desenvolvimentos aqui apresentados às práticas de negócio.The present thesis researches the process of decision making in supply chain management using a real options analysis framework. Specifically, we address issues regarding the optimal inventory level to hedge against demand uncertainties; the timing for equipment capacity implementation under market product mix complexity; the timing for workforce capacity reinforcement aiming market service requirements; and the decisions between integration and outsourcing in an uncertainty environment. Discrete and continuous time methodologies were used to identify the optimal value and timing of the options to adopt, when the demand is stochastic. Additionally, the effect of market requirements, such as product mix complexity and service level, were also taken into consideration. The demand is modelled under different stochastic processes; the impact of unexpected shocks is also explored, which enhances the generalization of the models to different business conditions. The applicability of the models enables the diversification and enrichment of the literature on the real options approach, within supply chain concept. Flexible inventory levels and the flexible capacity are supply chain features that can be used to deal with demand uncertainty. The thesis is organized by essays that support the application of the models, and consists of an introductory chapter (essay I) and six trials on factors that enhance the use of supply chain flexibility measures in uncertainty environments and an extended essay on the concept of flexibility to the evaluation of business plans. The second essay we present refers to the inventory value in a single echelon, as a measure of flexibility, subject to cost constraints. We introduce a new items’ classification to support the indicator designated as overstock. In the third and fourth experiments we extend the concept of overstock, promoting the interaction and balance between supply chain echelons in order to improve overall performance. For a practical application of the approaches, we adapted the third essay to the performance management, to support the establishment of coordinated and aligned goals, and used the fourth essay to the coordination of supply chains, supporting the integrated and sequential inventory planning. In the fifth essay we analyse manufacturing technology features in connection with the company's product mix, exploring the concept of investment as a flexible measure to deal with uncertain demand volume and product range flexibility. We dedicate the sixth essay to the analysis of the input "workforce", exploring the economic conditions for increasing the number of work shifts and determining the critical point for decision making in uncertainty environments. In the essay number seven, we explore the concept of internalisation of operations, focusing our analysis in the trigger moment that supports decision making in dynamic environments. We complement the analysis by introducing temporal factors that could disturb the change, including the preparation stage prior to any strategic alternative. Finally, in the last essay, we extend the concept of flexibility in uncertainty environments to the business plans analysis. Specifically, we explore the influence of the number of decision points in the flexibility of a plan in response to increasing market uncertainty. As an example, we use the mechanism of sequential budget to support the model. The increasing uncertainty in demand has promoted supply chains agility and flexibility, limiting the use of many of the traditional management techniques, because of their inability to incorporate the effects of uncertainty. Flexibility is clearly a competitive advantage that companies should have and therefore must be quantified. With the models developed and results that are presented, this thesis aims to demonstrate the usefulness of considering the uncertainty impact in management tools, using numerical examples to support the application of the models and the interpretation of the results, which clearly seek to bring the developments to the actual business practices

A Hierarchy of Near-Optimal Policies for Multistage Adaptive Optimization

In this paper, we propose a new tractable framework for dealing with linear dynamical systems affected by uncertainty, applicable to multistage robust optimization and stochastic programming. We introduce a hierarchy of near-optimal polynomial disturbance-feedback control policies, and show how these can be computed by solving a single semidefinite programming problem. The approach yields a hierarchy parameterized by a single variable (the degree of the polynomial policies), which controls the trade-off between the optimality gap and the computational requirements. We evaluate our framework in the context of three classical applications-two in inventory management, and one in robust regulation of an active suspension system-in which very strong numerical performance is exhibited, at relatively modest computational expense.National Science Foundation (U.S.) (Grant EFRI-0735905)National Science Foundation (U.S.) (Grant DMI-0556106)United States. Air Force Office of Scientific Research (Grant FA9550-06-1-0303

Using a Novel Hierarchical Coloured Petri Net to Model and Optimise Fleet Spare Inventory, Cannibalisation and Preventive Maintenance

Spare part availability is crucial to restoring inoperative platforms to the working state. Platforms failing during operation undergo corrective maintenance to replace failed components with spares. To reduce the frequency of this unplanned, corrective maintenance, platforms are inspected periodically and degraded components preventively replaced. Maintenance delays occur when spares are unavailable but cannibalisation can reduce these delays by allowing working components to be removed from inoperative platforms and used to restore other inoperative platforms. Fleets can be deployed across multiple bases that are served by one or more depots. Failed components that cannot be repaired at a base are sent to a depot for repair, along with associated requests for spares, which are satisfied by depot inventories.The management of fleet corrective and preventive maintenance, cannibalisation, spare inventories, provision of spares to bases and depots, and response of the depot to spare requests is a complex problem for fleet maintenance managers and critical to ensuring acceptable fleet performance. This paper presents a novel hierarchical coloured Petri net (HCPN) model of a fleet spare inventory system, which accounts for these issues alongside fleet deployment and mission-oriented operation. The application of the model is demonstrated using case studies of two example fleets