Inventory reduction in spare part networks by selective throughput time reduction

Abstract

We consider combined inventory control and throughput time reduction in multi-echelon, multi-indenture spare part networks for system upkeep of capital goods. We construct a model in which standard throughput times (TPTs) for repair and transportation can be reduced at additional costs. We first estimate the marginal impact of TPT reduction on the system availability. Next, we develop an optimization heuristic for the cost trade-off between TPT reduction and spare part inventories. In a case study at Thales Netherlands with limited options for TPT reduction, we find a net saving of 5.6% on spare part inventories. In an extensive numerical experiment, we find a 20% cost reduction on average compared to standard spare part inventory optimization. TPT reductions downstream in the spare part supply chain appear to be the most effective