Efficient Supply Chain Management at the U.S. Coast Guard Using Part-Age Dependent Supply Replenishment Policies

Abstract

The United States Coast Guard (USCG), now part of the Department of Homeland Security, has the mission to secure the U.S. coastline using a combination of air and sea capabilities. This paper focuses on an application of operations research techniques at the USCG to improve the performance of its aircraft service parts supply chain. We focused on evaluating the supply chain benefits from linking the aircraft maintenance database with the aircraft parts inventory database. This required us to (a) develop an approach to link the databases and (b) use aircraft maintenance information to improve the inventory management of service parts at the USCG. We first used mathematical programming tools to merge the maintenance database with the demand database. We then developed state-dependent supply replenishment policies that use part-age information to manage the service parts supply chain. We show that one of the proposed policies permits analytic estimation of the benefits of linking the data sets. The impact of these inventory policies was evaluated using empirical demand data for 41 critical parts over a five-year period. Computational results suggest that our proposed policies can lead to significant reductions in inventory cost over the current system, as high as 70% for some parts. Based on the insights from this study, the USCG is currently contracting with commercial vendors to develop an operational database and decision-support implementation across all parts.

Condition based spare parts supply

“…This is especially relevant if preventive replacements are undesired because of the loss of a significant part of the useful lifetime of components, or if preventive replacements are (almost) equally expensive as corrective replacements (e.g., in process manufacturing, operating 24/7). The two papers that are most closely related are by Deshpande et al (2006) and Louit et al (2011); for the differences with those and other studies, see Section 2. Second, we show that large savings can be obtained via condition based spare parts supply, and we identify under which circumstances the savings are largest.…”

“…A related paper is that of Deshpande et al (2006) in which part-age information is explicitly used in the inventory control policy. The authors assume that a part-age signal can be observed each period, which is then compared with a certain treshold value.…”

A survey of maintenance and service logistics management: Classification and research agenda from a maritime sector perspective

“…Similarly, Louit et al [82] present a model directed to the determination of the ordering decision for a spare part when the component in operation is subject to a condition monitoring program. Other related works incorporating condition monitoring information into spare parts inventory decisions can be found in [83,84,85,86].…”

System-oriented inventory models for spare parts

“…We are aware of the following papers that consider, in the context of spare parts inventory control, ADI that results from monitoring the degradation state of components in the installed base, all of which consider a periodic review model: Deshpande et al (2006), Li andRyan (2011), Louit et al (2011), and Lin et al (2012). In addition to adapting the spare parts supply, the maintenance policy may also be adapted, see, e.g., Elwany and Gebraeel (2008), Wang et al (2008), and Rausch and Liao (2010.…”

“…However, spare parts stocks may tie up a lot of capital. Commercial airlines are estimated to have over $40 billion worth of spare parts (Harrington, 2007, p.78), a single company such as ASML, which builds lithography equipment used in semiconductor manufacturing, owns spare parts worth tens of millions of euros (Kranenburg, 2006, p.78), and the US Coast Guard Aircraft owns inventories worth over $700 million (Deshpande et al, 2006(Deshpande et al, , p.1028. Stocking the right number of spare parts, not too few and not too many, is thus of key importance.…”