Inventory control of service parts in the final phase

Abstract

We consider an appliance manufacturer's problem of controlling the inventory of a service part in its final phase. That phase begins when the production of the appliance containing that part is discontinued (time 0), and ends when the last service contract on that appliance expires. Thus, the planning horizon is deterministic and known. There is no setup cost for ordering. However, if a part is not ordered at time 0, its price will be higher. The objective is to minimize the total expected undiscounted costs of replenishment, inventory holding, backorder, and disposal (of unused parts at the end of the planning horizon). We propose an ordering policy consisting of an initial order-up-to level at time 0, and a subsequent series of decreasing order-up-to levels for various intervals of the planning horizon. We present a method of calculating the optimal policy, along with a numerical example and sensitivity analysis.

Inventory strategies for systems with fast remanufacturing

“…This can be especially attractive if the product itself is no longer manufactured, that is, in the final phase of the service period 10 . In that phase, manufacturing new parts can be expensive and slow, since those parts are no longer needed in large quantities.…”

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

“…From the users' perspective, it will be difficult to procure the parts if the supplier discontinues the production. Several studies focus on finding the optimal final order quantity to be placed at the supplier, so that it covers the demand for parts until the equipment retirement (see, e.g., [122,125,126,127] and the references therein).…”

Last time buy and repair decisions for spare parts

“…In the latter, they propose a heuristic to integrate all the three options in decision making under specific conditions, assuming an order-up-to policy for joint production and remanufacturing. Teunter and Klein Haneveld (2002) consider providing spare parts from the external market at a much higher price. They propose two order-up-to level policies based on the ordering time, an initial level at time 0 and a subsequent series of decreasing levels for various intervals.…”

“…In this paper, we construct a model to determine the LTB quantity by making trade-offs between one alternative supply option, namely Ritchie and Wilcox (1977) Fortuin (1980) Fortuin (1981 Klein Haneveld and Teunter (1998) Hong, Koo, Lee, and Ahn (2008) Lowe (2012, 2014) Teunter and Fortuin (1998) Teunter and Fortuin (1999) Kleber et al (2012) Inderfurth and Mukherjee (2008) Inderfurth and Kleber (2013) Pourakbar, van der Laan, and Dekker (2014) Teunter and Klein Haneveld (2002) Krikke and van der Laan (2011) Van Kooten and Tan (2009) repair of the failed parts that are returned from the field. In this research, we collaborated with two industrial partners (computer machinery and printing machines).…”