Decentralized Inventory Control for Large-Scale Reverse Supply Chains: A Computationally Tractable Approach

Abstract

In this paper, we consider a new inventory control technique for large-scale supply chains including repairs. The part flow is bidirectional with broken parts propagated upstream for repair. It is well known that available optimization techniques for inventory control for bidirectional stochastic supply chains are computationally intractable and also necessitate several simplifying assumptions. In contrast, the proposed approach is an adaptive scheme that scales well to practically interesting large-scale multi-item supply chains. Furthermore, practical issues such as stochastic transport delays, manufacturing times, and repair times and probabilistic characterization of part repair success are handled in a unified framework. The control scheme is based on a hierarchical two-level architecture that comprises an adaptive set point generator and a lower-level order-up-to policy. An application to aircraft supply chains involving multiple original equipment manufacturers (OEMs), depots, bases, squadrons, and planes is also investigated.