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Service Parts Inventory Control with Lateral Transshipment that takes Time


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  • Guangyuan Yang

    (Erasmus University Rotterdam)

  • Rommert Dekker

    (Erasmus University Rotterdam)


In equipment-intensive industries such as truck manufacturing, electronics manufacturing, photo copiers,and airliners, service parts are often slow moving items for which, in some cases, the transshipment timeis not negligible. However, this aspect is hardly considered in the existing spare parts literature. We assessthe effect of non-negligible lateral transshipment time on various aspects of spare parts inventory control.Furthermore, we introduce customer-oriented service levels by taking the uncommitted pipeline stocks intoaccount. A case study in the dredging industry shows that lateral transshipment may lead to lower systemperformance, which supports the results from some recent studies. Furthermore, we find that considerablesavings can be obtained when we include the uncommitted pipeline stocks in both base stock allocation andlateral transshipment decisions.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 10-025/4.

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Date of creation: 26 Feb 2010
Date of revision: 10 Mar 2010
Handle: RePEc:dgr:uvatin:20100025

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Keywords: Inventory Control; Lateral Transshipment; METRIC; Customer-oriented Service Level;

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  1. 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, Elsevier, vol. 93(1), pages 309-317, January.
  2. Banerjee, Avijit & Burton, Jonathan & Banerjee, Snehamay, 2003. "A simulation study of lateral shipments in single supplier, multiple buyers supply chain networks," International Journal of Production Economics, Elsevier, Elsevier, vol. 81(1), pages 103-114, January.
  3. Hau L. Lee, 1987. "A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments," Management Science, INFORMS, INFORMS, vol. 33(10), pages 1302-1316, October.
  4. Kutanoglu, Erhan & Mahajan, Mohit, 2009. "An inventory sharing and allocation method for a multi-location service parts logistics network with time-based service levels," European Journal of Operational Research, Elsevier, Elsevier, vol. 194(3), pages 728-742, May.
  5. Sven Axsäter, 1990. "Modelling Emergency Lateral Transshipments in Inventory Systems," Management Science, INFORMS, INFORMS, vol. 36(11), pages 1329-1338, November.
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