REDUCING COSTS OF SPARE PARTS SUPPLY SYSTEMS VIA STATIC PRIORITIES

Ivo Adan · Andrei Sleptchenko · Geert‐Jan van Houtum

43 citations0/0 files storedAsia Pacific Journal of Operational Research

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Supply Chain and Inventory Management Reliability and Maintenance Optimization Advanced Queuing Theory Analysis

Abstract

We study static repair priorities in a system consisting of one repair shop and one stockpoint, where spare parts of multiple, critical repairables are kept on stock to serve an installed base of technical systems. Demands for ready-for-use parts occur according to Poisson processes, and are accompanied by returns of failed parts. The demands are met from stock if possible, and otherwise they are backordered and fulfilled as soon as a ready-for-use part becomes available. Returned failed parts are immediately sent into repair. The repairables are assigned to static priority classes. The repair shop is modeled as a single-server queue, where the failed parts are served according to these priority classes. We show that under a given assignment of repairables to priority classes, optimal spare parts stock levels follow from Newsvendor equations. Next, we develop fast and effective heuristics for the assignment of repairables to priority classes. Subsequently, we compare the performance of the system under these static priorities to the case with a First-Come First-Served (FCFS) service discipline. We show that in many cases static priorities reduce total inventory holding and backordering costs by more than 40%. Finally, we analyse the effect of the number of priority classes. We show that 2 priority classes suffice to obtain 90% of the maximal savings via static priorities.

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References

1989Annals of operations research 1968Metric: A Multi-Echelon Technique for Recoverable Item Control 1992Optimal Inventory Modeling of Systems: Multi-Echelon Techniques 2005Analysis and Algorithms for Service Parts Supply Chains 1997Models for multi-echelon repairable item inventory systems with limited repair capacity 1981Computation of Steady-State Probabilities for M/M/1 Priority Queues 2002Effects of finite repair capacity in multi-echelon, multi-indenture service part supply systems 2004Using repair priorities to reduce stock investment in spare part networks

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2017Cross-training policies for repair shops with spare part inventories 2016A heuristic stock allocation rule for repairable service parts 2015Joint queue length distribution of multi-class, single-server queues with preemptive priorities 2021Condition-based critical level policy for spare parts inventory management 2020Expediting in Two-Echelon Spare Parts Inventory Systems

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