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Improving the computational efficiency of metric-based spares algorithms

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  • Nowicki, David R.
  • Randall, Wesley S.
  • Ramirez-Marquez, Jose Emmanuel
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    Abstract

    We propose a new heuristic algorithm to improve the computational efficiency of the general class of Multi-Echelon Technique for Recoverable Item Control (METRIC) problems. The objective of a METRIC-based decision problem is to systematically determine the location and quantity of spares that either maximizes the operational availability of a system subject to a budget constraint or minimizes its cost subject to an operational availability target. This type of sparing analysis has proven essential when analyzing the sustainment policies of large-scale, complex repairable systems such as those prevalent in the defense and aerospace industries. Additionally, the frequency of these sparing studies has recently increased as the adoption of performance-based logistics (PBL) has increased. PBL represents a class of business strategies that converts the recurring cost associated with maintenance, repair, and overhaul (MRO) into cost avoidance streams. Central to a PBL contract is a requirement to perform a business case analysis (BCA) and central to a BCA is the frequent need to use METRIC-based approaches to evaluate how a supplier and customer will engage in a performance based logistics arrangement where spares decisions are critical. Due to the size and frequency of the problem there exists a need to improve the efficiency of the computationally intensive METRIC-based solutions. We develop and validate a practical algorithm for improving the computational efficiency of a METRIC-based approach. The accuracy and effectiveness of the proposed algorithm are analyzed through a numerical study. The algorithm shows a 94% improvement in computational efficiency while maintaining 99.9% accuracy.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 219 (2012)
    Issue (Month): 2 ()
    Pages: 324-334

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    Handle: RePEc:eee:ejores:v:219:y:2012:i:2:p:324-334

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    Web page: http://www.elsevier.com/locate/eor

    Related research

    Keywords: Inventory; Performance based logistics; Logistics; Supply chain; Optimization; Outcome based contracting;

    References

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    1. Caggiano, Kathryn E. & Jackson, Peter L. & Muckstadt, John A. & Rappold, James A., 2009. "Efficient computation of time-based customer service levels in a multi-item, multi-echelon supply chain: A practical approach for inventory optimization," European Journal of Operational Research, Elsevier, vol. 199(3), pages 744-749, December.
    2. Wong, Hartanto & Cattrysse, Dirk & Van Oudheusden, Dirk, 2005. "Stocking decisions for repairable spare parts pooling in a multi-hub system," International Journal of Production Economics, Elsevier, vol. 93(1), pages 309-317, January.
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    12. Kalchschmidt, Matteo & Zotteri, Giulio & Verganti, Roberto, 2003. "Inventory management in a multi-echelon spare parts supply chain," International Journal of Production Economics, Elsevier, vol. 81(1), pages 397-413, January.
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