Multi-Echelon vs. Single-Echelon Inventory Control Policies for Low-Demand Items

Hausman, Warren H.; Erkip, Nesim

doi:10.1287/mnsc.40.5.597

Cited by 65 publications

(37 citation statements)

References 10 publications

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“…They also show that managing multi-echelon systems by using adaptations of single-location methods can be dramatically inferior to methods designed for taking advantage of a system's structure. Hausman and Erkip [6] extended the work of Muckstadt and Thomas by presenting an improved single-echelon model to approximate multi-echelon model performance. Axsäter [1] developed an alternative, exact evaluation procedure, and in addition developed an exact optimization procedure for the single-item problem.…”

Section: Introductionmentioning

confidence: 99%

Efficient heuristics for two-echelon spare parts inventory systems with an aggregate mean waiting time constraint per local warehouse

Wong

Kranenburg²,

Houtum

et al. 2007

OR Spectrum

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Please check the document version of this publication:• A submitted manuscript is the version of the article upon submission and before peer-review. There can be important differences between the submitted version and the official published version of record. People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website.• The final author version and the galley proof are versions of the publication after peer review.• The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.• Users may download and print one copy of any publication from the public portal for the purpose of private study or research.• You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal.If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement: www.tue.nl/taverne Take down policy If you believe that this document breaches copyright please contact us at: openaccess@tue.nl providing details and we will investigate your claim. Abstract: This paper presents solution procedures for determining close-to-optimal stocking policies in a multi-item two-echelon spare parts inventory system. The system we consider consists of a central warehouse and a number of local warehouses, and there is a target for the aggregate mean waiting time per local warehouse. We develop four different heuristics and derive a lower bound on the optimal total cost. The effectiveness of each heuristic is assessed by measuring the relative gap between the heuristic's total cost and the lower bound. The results of the computational experiments show that a greedy procedure performs most satisfactorily. It is accurate as indicated by relatively small gaps, easy to implement, and furthermore, the computational requirements are limited. The computational efficiency can be increased by using Graves' approximate evaluation method instead of an exact evaluation method, while the results remain accurate.

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Section: Introductionmentioning

confidence: 99%

Efficient heuristics for two-echelon spare parts inventory systems with an aggregate mean waiting time constraint per local warehouse

Wong

Kranenburg²,

Houtum

et al. 2007

OR Spectrum

View full text Add to dashboard Cite

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“…The model developed by Muckstadt and Thomas [1] (used for further analysis by Hausman and Erkip [14]) is an extension of the METRIC model [13] in that it allows for fast direct deliveries from the central warehouse (or even from the factory) when a demand at a local warehouse can not be met from stock on hand. It is assumed in this model that an emergency resupply order (i.e., direct delivery) that is triggered to ®ll a local demand, is always used for this purpose, even if a normal replenishment order arrives earlier at the local warehouse.…”

Section: The Muckstadt±hausman Modelmentioning

confidence: 99%

“…We will compare the numerical results of this model with the results of our model. In a later paper Hausman and Erkip [14] used the model of Muckstadt and Thomas for further analysis.…”

Section: Introductionmentioning

confidence: 99%

A trade off between emergency repair and inventory investment

1998

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In this paper we present an emergency repair model. We model a situation where failed parts arrive at a repair shop according to a Poisson process. If the stock on hand of serviceable spare parts exceeds a given emergency trigger level, the failed part is sent into normal repair. Otherwise the failed part is sent into an alternative emergency repair channel. Upon arrival failed parts are exchanged for serviceable spare parts, if available. Otherwise the demand is backordered. A backorder is ®lled with the ®rst part that becomes available from either one of the repair processes. The repair times (including transportation time) are assumed to be exponentially distributed. We analyze the impact of using emergency repair on two service measures: the fraction of demand that is satis®ed from stock on hand and the expected duration of a backorder. We calculate the initial stock level and the emergency trigger level that minimize the total cost for a given emergency repair rate. The proposed policy is compared with two other policies: (1) emergency repair is not used and (2) emergency trigger level is zero. We ®nd that signi®cant service improvements and cost reductions can be obtained by using our emergency repair policy. We also present simulation results showing that the distribution of the repair times has a negligible eect on the relevant service measures. Finally, we compare our results with the results of an emergency supply model by Muckstadt and Thomas [1]. Again we observe signi®cant cost reductions when using our policy.

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“…They also compare centralized and decentralized decision making. Hausman and Erkip (1994) improved the decentralized case of Muckstadt and Thomas (1980) and showed that the performance of the improved single-echelon model is within 3% and 5% of the multi-echelon model of Muckstadt and Thomas (1980). Axsäter et al (2004) considered a two-echelon inventory system in which emergency deliveries are done only from the central repair facility to the local warehouses.…”

Section: Introductionmentioning

confidence: 99%

A new approximate evaluation method for two-echelon inventory systems with emergency shipments

2013

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. (2011). A new approximate evaluation method for twoechelon inventory systems with emergency shipments. (BETA publicatie : working papers; Vol. 363). Eindhoven: Technische Universiteit Eindhoven. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.• Users may download and print one copy of any publication from the public portal for the purpose of private study or research.• You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal ? Take down policyIf you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Abstract We consider the control of repairable spare parts in a network consisting of a central warehouse, a central repair facility, and multiple local warehouses. Demands for spare parts occur at the local warehouses. If a local warehouse is out of stock, then an arriving demand is satisfied by an emergency delivery from the central warehouse or the central repair facility. Such emergency shipments are common practice for networks that support technical systems with high downtime costs, and it is important to take them into account when the inventory is optimized. Our main contribution consists of the development of a new approximate evaluation method. This method gives accurate approximations for the key performance measures, as we show via numerical analysis. The method is also fast and thus can easily be incorporated in existing (greedy) heuristic optimization methods. Our method outperforms the approximate evaluation method of Muckstadt and Thomas (1980), as we also show via the numerical analysis. Finally, we show that the performance of the system is rather insensitive to the leadtime distribution of the repairs at the central repair facility, which implies that our method works well for generally distributed repair leadtimes.

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Multi-Echelon vs. Single-Echelon Inventory Control Policies for Low-Demand Items

Cited by 65 publications

References 10 publications

Efficient heuristics for two-echelon spare parts inventory systems with an aggregate mean waiting time constraint per local warehouse

Efficient heuristics for two-echelon spare parts inventory systems with an aggregate mean waiting time constraint per local warehouse

A trade off between emergency repair and inventory investment

A new approximate evaluation method for two-echelon inventory systems with emergency shipments

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