Spare Parts Inventory Control under System Availability Constraints (International Series in Operations Research & Management Science Book 227)

This book focuses on the tactical planning level for spare parts management. It describes a series of multi-item inventory models and presents exact and heuristic optimization methods, including greedy heuristics that work well for real, life-sized problems. The intended audience consists of graduate students, starting scholars in the field of spare parts inventory control, and spare parts planning specialists in the industry. In individual chapters the authors consider topics including: a basic single-location model; single-location models with multiple machine types and/or machine groups; the multi-location model with lateral transshipments; the classical METRIC model and its generalization to multi-indenture systems; and a single-location model with an explicit modeling of the repair capacity for failed parts and the priorities that one can set there. Various chapters of the book are used in a master course at Eindhoven University of Technology and in a PhD course of the Graduate Program Operations Management and Logistics (a Dutch network that organizes PhD courses in the field of OM&L). The required pre-knowledge consists of probability theory and basic knowledge of Markov processes and queuing theory. End-of-chapter problems appear for all chapters, with some answers appearing in an appendix. Preface 8 Contents 12 About the Authors 16 1 Introduction 17 1.1 Importance of Capital Goods, Maintenance and Spare Parts 17 1.2 Trends 19 1.3 Typical Features of Spare Parts Inventories 21 1.4 Objectives of This Book 23 1.5 Outline 24 References 25 2 Basic Multi-Item, Single-Location Inventory Model 27 2.1 Introduction 27 2.2 Basic Model 28 2.2.1 Overview of Assumptions 30 2.3 Evaluation 31 2.4 Optimization 34 2.4.1 Convexity of the Mean Backorder Positions 35 2.4.2 Greedy Algorithm 36 2.5 Alternative Optimization Techniques 39 2.5.1 Lagrangian Relaxation 40 2.5.2 Dantzig-Wolfe Decomposition 42 2.6 Item Approach 45 2.7 Alternative Service Measures 46 2.7.1 Aggregate Mean Waiting Time 46 2.7.2 Average Availability 47 2.7.3 Sum of Backorder Probabilities 48 2.7.4 Aggregate Fill Rate 50 2.7.5 Aggregate Mean Number of Stockouts 52 2.8 Inventory Planning During the Exploitation Phase 54 2.9 Emergency Shipments 55 2.10 Extensions 58 2.10.1 Consumables and Condemnation 58 2.10.2 Excluding Pipeline Stock 58 2.10.3 Batching 59 2.10.4 Criticality 60 2.11 Concluding Remarks 61 Problems 61 References 64 3 Multiple Machine Types with Commonality 66 3.1 Introduction 66 3.2 Model 67 3.3 Analysis 70 3.3.1 Enumeration 70 3.3.2 Greedy Heuristic 71 3.3.3 Dantzig-Wolfe Decomposition 73 3.3.3.1 Lower Bound 74 3.3.3.2 Heuristic Solution 76 3.4 Computational Results 77 3.4.1 Setup for Experiment 1 77 3.4.2 Quality of the Heuristics 79 3.4.3 Benefits of Commonality 81 3.5 Case Study: ASML 82 3.6 Concluding Remarks 83 Problems 84 References 85 4 Service Differentiation 86 4.1 Introduction 86 4.2 Model 87 4.3 Underlying Single Item Problem 90 4.3.1 Single Item Model 90 4.3.2 Exact Solution for Problem (Q(S)) 92 4.3.3 Exact Solution for Problem (Q) 94 4.4 Dantzig-Wolfe Decomposition 96 4.4.1 Lower Bound 96 4.4.2 Heuristic Solution 98 4.5 Computational Experiment 99 4.6 Case Study: ASML 104 4.7 Concluding Remarks 106 Problems 107 References 109 5 Multi-location System with Lateral Transshipments 111 5.1 Introduction 111 5.2 Model 112 5.3 Exact Evaluation 117 5.4 Approximate Evaluation 119 5.4.1 Decoupling the Regulars from the Mains 120 5.4.2 Decoupling the Mains 121 5.4.3 Formal Description of the Approximate Evaluation Method 123 5.4.4 Numerical Comparison 124 5.5 Greedy Heuristic 128 5.6 Partial vs. Full Pooling 131 5.7 Case Study: ASML 132 5.8 Concluding Remarks 135 Problems 136 References 138 6 Two-Echelon System 140 6.1 Introduction 140 6.2 Model 141 6.3 Evaluation Procedures 144 6.3.1 Exact Evaluation 144 6.3.2 Approximate Evaluation Based on Two-Moment Fits 148 6.3.3 METRIC Approach 151 6.4 Heuristics 152 6.4.1 Greedy Heuristic 152 6.4.2 Local Search 154 6.4.3 Dantzig-Wolfe Decomposition 155 6.4.4 Overview of Heuristics 156 6.5 Computational Results 157 6.5.1 Setup of Test Beds 157 6.5.2 Quality of the Heuristics 158 6.5.3 Applying Approximate Evaluation Methods 161 6.6 Concluding Remarks 163 Appendix: Fitting Discrete Distributions on the First Two Moments 164 Problems 168 References 170 7 Multi-echelon, Multi-indenture System 172 7.1 Introduction 172 7.2 Model 173 7.2.1 Overview of Assumptions and Notations 178 7.3 Exact Evaluation 180 7.3.1 Preliminary Results 181 7.3.2 Recursive Expressions for Pipelines 182 7.4 Approximate Evaluation 185 7.5 Greedy Heuristic 187 7.6 Case: Royal Netherlands Navy 189 7.6.1 Optimizing Inventory Investment and System Availability 189 7.6.2 Case Results 191 7.7 Concluding Remarks 193 Problems 194 References 195 8 Static Repair Priorities 197 8.1 Introduction 197 8.2 Model 199 8.3 Evaluation 202 8.4 Optimization 204 8.4.1 Optimization of the Basestock Policy 205 8.4.2 Optimization of the Priority Assignment 206 8.5 Computational Results 208 8.5.1 Test Bed 208 8.5.2 Optimality Gap of the Heuristics 209 8.5.3 Comparison of the Heuristics for Large Instances 212 8.5.4 Costs Savings Relative to FCFS 213 8.6 Stylized Cases 215 8.7 Concluding Remarks 216 Problems 218 References 219 Answers to Selected Problems 221 Index 223 This book focuses on the tactical planning level for spare parts management. It describes a series of multi-item inventory models and presents exact and heuristic optimization methods, including greedy heuristics that work well for real, life-sized problems. The intended audience consists of graduate students, starting scholars in the field of spare parts inventory control, and spare parts planning specialists in the industry. In individual chapters the authors consider topics including: a basic single-location model; single-location models with multiple machine types and/or machine groups; the multi-location model with lateral transshipments; the classical METRIC model and its generalization to multi-indenture systems; and a single-location model with an explicit modeling of the repair capacity for failed parts and the priorities that one can set there. Various chapters of the book are used in a master course at Eindhoven University of Technology and in a PhD course of the Graduate Program Operations Management and Logistics (a Dutch network that organizes PhD courses in the field of OM & L). The required pre-knowledge consists of probability theory and basic knowledge of Markov processes and queuing theory. End-of-chapter problems appear for all chapters, with some answers appearing in an appendix This book focuses on the tactical planning level for spare parts management. It describes a series of multi-item inventory models and presents exact and heuristic optimization methods, including greedy heuristics that work well for real, life-sized problems. The intended audience consists of graduate students, starting scholars in the field of spare parts inventory control, and spare parts planning specialists in the industry. In individual chapters the authors consider topics including: a basic single-location model; single-location models with multiple machine types and/or machine groups; the multi-location model with lateral transshipments; the classical METRIC model and its generalization to multi-indenture systems; and a single-location model with an explicit modeling of the repair capacity for failed parts and the priorities that one can set there. Various chapters of the book are used in a master course at Eindhoven University of Technology and in a PhD course of the Graduate Program Operations Management and Logistics (a Dutch network that organizes PhD courses in the field of OM&L). The required pre-knowledge consists of probability theory and basic knowledge of Markov processes and queuing theory.℗l End-of-chapter problems appear for all chapters, with some answers appearing in an appendix Front Matter....Pages i-xv Introduction....Pages 1-10 Basic Multi-Item, Single-Location Inventory Model....Pages 11-49 Multiple Machine Types with Commonality....Pages 51-70 Service Differentiation....Pages 71-95 Multi-location System with Lateral Transshipments....Pages 97-125 Two-Echelon System....Pages 127-158 Multi-echelon, Multi-indenture System....Pages 159-183 Static Repair Priorities....Pages 185-208 Back Matter....Pages 209-215