IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v231y2015i1p283-30310.1007-s10479-013-1362-z.html
   My bibliography  Save this article

Service differentiation in spare parts supply through dedicated stocks

Author

Listed:
  • Elisa Alvarez
  • Matthieu Heijden
  • W. Zijm

Abstract

We investigate the option of keeping dedicated stocks at customer sites in addition to stock kept at some central location as a tool for applying service differentiation in spare parts supply. We study the resulting two-echelon system in a multi-item setting, both under backordering and under the use of emergency shipments (equivalent to lost sales for the inventory system). In an extensive computational experiment, we show that dedicated stocks have significant added value: the approach results in clear savings compared to a strategy of providing all customers with uniform service. Furthermore, the savings found with dedicated stocks are close to those with critical level policies, with dedicated stocks usually being much easier to implement in practice. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Elisa Alvarez & Matthieu Heijden & W. Zijm, 2015. "Service differentiation in spare parts supply through dedicated stocks," Annals of Operations Research, Springer, vol. 231(1), pages 283-303, August.
    • Handle: RePEc:spr:annopr:v:231:y:2015:i:1:p:283-303:10.1007/s10479-013-1362-z
    DOI: 10.1007/s10479-013-1362-z
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10479-013-1362-z
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10479-013-1362-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Arthur F. Veinott, 1965. "Optimal Policy in a Dynamic, Single Product, Nonstationary Inventory Model with Several Demand Classes," Operations Research, INFORMS, vol. 13(5), pages 761-778, October.
    2. Andersson, Jonas & Melchiors, Philip, 2001. "A two-echelon inventory model with lost sales," International Journal of Production Economics, Elsevier, vol. 69(3), pages 307-315, February.
    3. Hill, R.M., 2007. "Continuous-review, lost-sales inventory models with Poisson demand, a fixed lead time and no fixed order cost," European Journal of Operational Research, Elsevier, vol. 176(2), pages 956-963, January.
    4. Bijvank, Marco & Vis, Iris F.A., 2011. "Lost-sales inventory theory: A review," European Journal of Operational Research, Elsevier, vol. 215(1), pages 1-13, November.
    5. Kathryn E. Caggiano & Peter L. Jackson & John A. Muckstadt & James A. Rappold, 2007. "Optimizing Service Parts Inventory in a Multiechelon, Multi-Item Supply Chain with Time-Based Customer Service-Level Agreements," Operations Research, INFORMS, vol. 55(2), pages 303-318, April.
    6. A A Kranenburg & G J van Houtum, 2008. "Service differentiation in spare parts inventory management," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(7), pages 946-955, July.
    7. Patrik Alfredsson & Jos Verrijdt, 1999. "Modeling Emergency Supply Flexibility in a Two-Echelon Inventory System," Management Science, INFORMS, vol. 45(10), pages 1416-1431, October.
    8. Kranenburg, A.A. & Van Houtum, G.J., 2007. "Effect of commonality on spare parts provisioning costs for capital goods," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 221-227, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    2. Christiane B. Haubitz & Ulrich W. Thonemann, 2021. "How to Change a Running System—Controlling the Transition to Optimized Spare Parts Inventory Policies," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1386-1405, May.
    3. Arts, Joachim, 2017. "A multi-item approach to repairable stocking and expediting in a fluctuating demand environment," European Journal of Operational Research, Elsevier, vol. 256(1), pages 102-115.
    4. Sauvey, Christophe & Melo, Teresa & Correia, Isabel, 2019. "Two-phase heuristics for a multi-period capacitated facility location problem with service-differentiated customers," Technical Reports on Logistics of the Saarland Business School 16, Saarland University of Applied Sciences (htw saar), Saarland Business School.
    5. Christopher A. Boone & Benjamin T. Hazen & Joseph B. Skipper & Robert E. Overstreet, 2018. "A framework for investigating optimization of service parts performance with big data," Annals of Operations Research, Springer, vol. 270(1), pages 65-74, November.
    6. Yan, Tao & Lei, Yaguo & Wang, Biao & Han, Tianyu & Si, Xiaosheng & Li, Naipeng, 2020. "Joint maintenance and spare parts inventory optimization for multi-unit systems considering imperfect maintenance actions," Reliability Engineering and System Safety, Elsevier, vol. 202(C).
    7. van den Berg, D. & van der Heijden, M.C. & Schuur, P.C., 2016. "Allocating service parts in two-echelon networks at a utility company," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 58-67.
    8. Correia, Isabel & Melo, Teresa, 2019. "Dynamic facility location problem with modular capacity adjustments under uncertainty," Technical Reports on Logistics of the Saarland Business School 17, Saarland University of Applied Sciences (htw saar), Saarland Business School.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. van den Berg, D. & van der Heijden, M.C. & Schuur, P.C., 2016. "Allocating service parts in two-echelon networks at a utility company," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 58-67.
    2. Alvarez, E.M. & van der Heijden, M.C. & Zijm, W.H.M., 2013. "The selective use of emergency shipments for service-contract differentiation," International Journal of Production Economics, Elsevier, vol. 143(2), pages 518-526.
    3. Alvarez, E.M. & van der Heijden, M.C. & Vliegen, I.M.H. & Zijm, W.H.M., 2014. "Service differentiation through selective lateral transshipments," European Journal of Operational Research, Elsevier, vol. 237(3), pages 824-835.
    4. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    5. Bijvank, Marco & Vis, Iris F.A., 2011. "Lost-sales inventory theory: A review," European Journal of Operational Research, Elsevier, vol. 215(1), pages 1-13, November.
    6. Alvarez, Elisa & van der Heijden, Matthieu, 2014. "On two-echelon inventory systems with Poisson demand and lost sales," European Journal of Operational Research, Elsevier, vol. 235(1), pages 334-338.
    7. Johansson, Lina & Olsson, Fredrik, 2018. "Age-based inventory control in a multi-echelon system with emergency replenishments," European Journal of Operational Research, Elsevier, vol. 265(3), pages 951-961.
    8. Al Hanbali, Ahmad & van der Heijden, Matthieu, 2013. "Interval availability analysis of a two-echelon, multi-item system," European Journal of Operational Research, Elsevier, vol. 228(3), pages 494-503.
    9. Pourakbar, Morteza & Dekker, Rommert, 2012. "Customer differentiated end-of-life inventory problem," European Journal of Operational Research, Elsevier, vol. 222(1), pages 44-53.
    10. van Jaarsveld, Willem & Dollevoet, Twan & Dekker, Rommert, 2015. "Improving spare parts inventory control at a repair shop," Omega, Elsevier, vol. 57(PB), pages 217-229.
    11. van Wijk, A.C.C. & Adan, I.J.B.F. & van Houtum, G.J., 2019. "Optimal lateral transshipment policies for a two location inventory problem with multiple demand classes," European Journal of Operational Research, Elsevier, vol. 272(2), pages 481-495.
    12. Dai, Bo & Chen, Haoxun & Li, Yuan & Zhang, Yidong & Wang, Xiaoqing & Deng, Yuming, 2023. "An alternating direction method of multipliers for optimizing (s, S) policies in a distribution system with joint replenishment volume constraints," Omega, Elsevier, vol. 116(C).
    13. Jeet, Vishv & Kutanoglu, Erhan, 2018. "Part commonality effects on integrated network design and inventory models for low-demand service parts logistics systems," International Journal of Production Economics, Elsevier, vol. 206(C), pages 46-58.
    14. van Wingerden, E. & Tan, T. & Van Houtum, G.J., 2019. "The impact of an emergency warehouse in a two-echelon spare parts network," European Journal of Operational Research, Elsevier, vol. 276(3), pages 983-997.
    15. Christiane B. Haubitz & Ulrich W. Thonemann, 2021. "How to Change a Running System—Controlling the Transition to Optimized Spare Parts Inventory Policies," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1386-1405, May.
    16. Erhun Özkan & Geert-Jan Houtum & Yasemin Serin, 2015. "A new approximate evaluation method for two-echelon inventory systems with emergency shipments," Annals of Operations Research, Springer, vol. 224(1), pages 147-169, January.
    17. Johansen, Søren Glud, 2013. "Modified base-stock policies for continuous-review, lost-sales inventory models with Poisson demand and a fixed lead time," International Journal of Production Economics, Elsevier, vol. 143(2), pages 379-384.
    18. Arts, Joachim, 2017. "A multi-item approach to repairable stocking and expediting in a fluctuating demand environment," European Journal of Operational Research, Elsevier, vol. 256(1), pages 102-115.
    19. Schneider, Frank & Klabjan, Diego, 2013. "Inventory control in multi-channel retail," European Journal of Operational Research, Elsevier, vol. 227(1), pages 101-111.
    20. Basten, Rob J.I. & Ryan, Jennifer K., 2019. "The value of maintenance delay flexibility for improved spare parts inventory management," European Journal of Operational Research, Elsevier, vol. 278(2), pages 646-657.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:231:y:2015:i:1:p:283-303:10.1007/s10479-013-1362-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.