References of "Manufacturing and Service Operations Management"
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See detailExpediting in Two-Echelon Spare Parts Inventory Systems
Drent, Melvin UL; Arts, Joachim UL

in Manufacturing and Service Operations Management (2021), 23(6), 1431-1448

We consider a two-echelon spare parts inventory system consisting of one central warehouse and multiple local warehouses. Each warehouse keeps multiple types of repairable parts to maintain several types ... [more ▼]

We consider a two-echelon spare parts inventory system consisting of one central warehouse and multiple local warehouses. Each warehouse keeps multiple types of repairable parts to maintain several types of capital goods. The local warehouses face Poisson demand and are replenished by the central warehouse. We assume that unsatisfied demand is backordered at all warehouses. Furthermore, we assume deterministic lead times for the replenishments of the local warehouses. The repair shop at the central warehouse has two repair options for each repairable part: a regular repair option and an expedited repair option. Both repair options have stochastic lead times. Irrespective of the repair option, each repairable part uses a certain resource for its repair. Assuming a dual-index policy at the central warehouse and base stock control at the local warehouses, an exact and efficient evaluation procedure for a given control policy is formulated. To find an optimal control policy, we look at the minimization of total investment costs under constraints on both the aggregate mean number of backorders per capital good type and the aggregate mean fraction of repairs that are expedited per repair resource. For this non-linear non-convex integer programming problem, we develop a greedy heuristic and an algorithm based on decomposition and column generation. Both solution approaches perform very well with average optimality gaps of 1.56 and 0.23 percent, respectively, across a large test bed of industrial size. Based on a case study at Netherlands Railways, we show how managers can significantly reduce the investment in repairable spare parts when dynamic repair policies are leveraged to prioritize repair of parts whose inventory is critically low. [less ▲]

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See detailStrategic Safety Stock Placement in Supply Networks with Static Dual Supply
Klosterhalfen, Steffen UL; Minner, Stefan; Willems, Sean

in Manufacturing and Service Operations Management (2014), 16(2), 204-219

Many real-world supply networks source required materials from multiple suppliers. Existing multiechelon inventory optimization approaches either restrict their scope to multiple supply sources in two ... [more ▼]

Many real-world supply networks source required materials from multiple suppliers. Existing multiechelon inventory optimization approaches either restrict their scope to multiple supply sources in two-echelon systems or single suppliers in multiechelon systems. We develop an exact mathematical model for static dual supply in a general acyclic N-echelon network structure, which builds on the guaranteed-service framework for safety stock optimization. It is assumed that the suppliers are allocated static fractions of demand. We prove that for normally distributed demand an extreme point property holds. We present a real example from the industrial electronics industry consisting of five echelons and three dual-sourced materials. This example forms the basis for a numerical analysis. Compared with the only previously published approximate solution, our exact approach results in considerable cost savings because the exact model captures inventory pooling in a way that the approximation is unable to do. For a set of test problems, total safety stock cost savings are 9.1%, on average. [less ▲]

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