Aggregate constrained inventory systems with independent multi-product demand: control practices and theoretical limitations

In practice, inventory managers are often confronted with a need to consider one or more aggregate constraints. These aggregate constraints result from available workspace, workforce, maximum investment or target service level. We consider independent multi-item inventory problems with aggregate constraints and one of the following characteristics: deterministic leadtime demand, newsvendor, basestock policy, rQ policy and sS policy. We analyze some recent relevant references and investigate the considered versions of the problem, the proposed model formulations and the algorithmic approaches. Finally we highlight the limitations from a practical viewpoint for these models and point out some possible direction for future improvements

ABC classification of spare parts considering costs and service

[EN] This paper focuses on the multi-item problem where it is necessary to reach an overall stock availability of the spare parts while minimising involved costs. Over the last years, a number of authors have proposed a variety of approaches and provided different rules in order to classify items in ABC classes. An additional optimisation has to be performed in order to minimise the inventory cost while fulfilling a target service level. The proposed approach focuses on the characteristics of spare parts and optimises the inventory cost subject to the overall target fill rate by means of a closed form formula for calculating the fill rate of every item independently. This new method is validated with a dataset of spare parts of an airline company and clearly outperforms the alternative methods in terms of inventory cost reduction and ease of calculation. Extensions of our results are also indicated.S244255223-

A framework for investigating optimization of service parts performance with big data

As national economies continue to evolve across the globe, businesses are increasing their capacity to not only generate new products and deliver them to customers, but also to increase levels of after-sales service. One major component of after-sale service involves service parts management. However, service parts businesses are typically seen as add-ons to existing business models, and are not well integrated with primary businesses. Consequently, many service parts operations are managed using ad-hoc practices that are often subordinated to primary businesses. Early research in this area has been instrumental in assisting organizations to begin optimizing some aspects of service parts management. However, performance goals for service parts management are often ill-defined. Further, because these service parts businesses are often subordinated to primary businesses within a firm, the use of newer big data applications to help manage these processes is almost completely absent. Herein, we develop a framework that seeks to define service parts performance goals for the purpose of outlining where scholars and practitioners can further examine where, how, and why big data applications can be employed to enhance service parts management performance

Multi-item Inventory Problem: Literature Review and a Proposal for Practitioners

[EN] Inventory managers have to assign an inventory policy to each item seeking to satisfy a required global service level with the lowest inventory cost. This paper reviews the existing literature and, based on current research, the most appropriate options are proposed to be used by practitioners.[ES] Los gestores de inventario tienen que asignar una política de inventario a cada artículo con el fin de satisfacer un nivel de servicio global requerido con el menor coste de inventario. En el presente documento se examina la bibliografía existente y, sobre la base de las investigaciones actuales, se proponen las opciones más apropiadas para su utilización práctica.Cardós, M.; De-La-Fuente-Aragón, M.; Ros-Mcdonnell, L. (2021). Multi-item Inventory Problem: Literature Review and a Proposal for Practitioners. Direccion y Organizacion. 74:67-80. https://doi.org/10.37610/dyo.v0i74.603S67807

After-sales service competition in a supply chain: Does uncertainty affect the conflict between profit maximization and customer satisfaction?

After-sales services are a key strategic tool in the durable consumer product market. They allow a manufacturer and a retailer to capture more sales and profit. Less obvious, however, is how the uncertainty of the customer\u27s needs for after-sales services influences after-sales service decisions. As an extension of Kurata and Nam\u27s 2010 (International Journal of Production Economics 127 (1), 136–146) work, in this paper we explore the effect of uncertainty on after-sales service decisions by comparing several information structures in a two-stage supply chain. The model presented in this paper demonstrates that uncertainty may temporally alleviate the discrepancy between customers’ optimal service level and a firm\u27s service decisions based on maximizing profits (referred to here as accidental outperformance). However, ultimately, uncertainty will never improve supply chain performance. We determine probabilities that such accidental outperformance may mislead the firm into making erroneous after-sales service decisions due to misunderstandings regarding uncertainty. In addition, our analysis shows that a firm\u27s effort to provide efficient service operations will increase the chance of accidental outperformance. Based on the analytical results, we also provide several practical insights for business

Stock keeping unit fill rate specification

The fill rate is the most widely applied service level measure in industry and yet there is minimal advice available on how it should be differentiated on an individual Stock Keeping Unit (SKU) basis given that there is an overall system target service level. The typical approach utilized in practice, and suggested in academic textbooks, is to set the individual service levels equal to the targeted performance required across an entire stock base or a certain class of SKUs (e.g., in ABC classification). In this paper it is argued that this approach is far from optimal and a simple methodology is proposed that is shown (on real life datasets) to be associated with reductions in stock investments. In addition, the new approach is intuitive, very easy to implement and thus highly likely to be positively received by practitioners and software manufacturer

Inventory drivers in a pharmaceutical supply chain

In recent years, inventory reduction has been a key objective of pharmaceutical companies, especially within cost optimization initiatives. Pharmaceutical supply chains are characterized by volatile and unpredictable demands –especially in emergent markets-, high service levels, and complex, perishable finished-good portfolios, which makes keeping reasonable amounts of stock a true challenge. However, a one-way strategy towards zero-inventory is in reality inapplicable, due to the strategic nature and importance of the products being commercialised. Therefore, pharmaceutical supply chains are in need of new inventory strategies in order to remain competitive. Finished-goods inventory management in the pharmaceutical industry is closely related to the manufacturing systems and supply chain configurations that companies adopt. The factors considered in inventory management policies, however, do not always cover the full supply chain spectrum in which companies operate. This paper works under the pre-assumption that, in fact, there is a complex relationship between the inventory configurations that companies adopt and the factors behind them. The intention of this paper is to understand the factors driving high finished-goods inventory levels in pharmaceutical supply chains and assist supply chain managers in determining which of them can be influenced in order to reduce inventories to an optimal degree. Reasons for reducing inventory levels are found in high inventory holding and scrap related costs; in addition to lost sales for not being able to serve the customers with the adequate shelf life requirements. The thesis conducts a single case study research in a multi-national pharmaceutical company, which is used to examine typical inventory configurations and the factors affecting these configurations. This paper presents a framework that can assist supply chain managers in determining the most important inventory drivers in pharmaceutical supply chains. The findings in this study suggest that while external and downstream supply chain factors are recognized as being critical to pursue inventory optimization initiatives, pharmaceutical companies are oriented towards optimizing production processes and meeting regulatory requirements while still complying with high service levels, being internal factors the ones prevailing when making inventory management decisions. Furthermore, this paper investigates, through predictive modelling techniques, how various intrinsic and extrinsic factors influence the inventory configurations of the case study company. The study shows that inventory configurations are relatively unstable over time, especially in configurations that present high safety stock levels; and that production features and product characteristics are important explanatory factors behind high inventory levels. Regulatory requirements also play an important role in explaining the high strategic inventory levels that pharmaceutical companies hold