Near-Optimal Service Constrained Stocking Policies for Spare Parts

Abstract

Consider a facility that stocks various parts in support of repairs for a set of products in some customer region. The problem considered is to determine base stock policies for each part to minimize expected inventory costs across all parts while satisfying some service constraint on total customer repair services completed. A heuristic procedure is developed for several variants of this problem. The heuristic is based on duality theory and is shown to have a close connection to the well known Greedy Heuristic. Encouraging experimental results on the performance of the proposed heuristic are reported. The basic problem structure considered is similar to the tool-kit problem, but it is formulated to allow applications in much broader spare part logistics contexts.