Modeling diminishing marginal returns in ahierarchical inventory system of reparable spare parts

Abstract

Safety stock levels of reparable spare parts in a hierarchical inventory structure are determined relative to the marginal improvement to end item availability provided by each stock level. This research is focused on the United States Air Force (USAF) hierarchical inventory and repair system as modeled by the Multi‐Echelon‐Technique‐for‐Recoverable‐Item‐Control (METRIC) methodology. A piecewise linear modeling framework is introduced based on output from the Aircraft Availability Model (AAM), a model that is part of the METRIC family of models. The underlying nature of the piecewise linear formulation provides integer stock levels with continuous decision variables. This model provides the highest attainable end‐item availability relative to an inventory of reparable spare parts. Additionally, the model provides a robust platform for the conduct of extensive post‐optimality analysis. While this research focuses on the METRIC family of models, the methodology developed may be applied to any hierarchical inventory of reparable spares that conforms to the model’sunderlying mathematical structure.