Optimizer: IBM's Multi-Echelon Inventory System for Managing Service Logistics

Morris Cohen, Pasumarti V. Kamesam, Paul Kleindorfer, Hau Lee and Armen Tekerian
Additional contact information
Morris Cohen: Department of Decision Sciences, University of Pennsylvania, Philadelphia, Pennsylvania 19014
Pasumarti V. Kamesam: IBM T. J. Watson Research Center, Yorktown Heights, New York 10598
Paul Kleindorfer: Department of Decision Sciences, University of Pennsylvania, Philadelphia, Pennsylvania 19014
Hau Lee: Department of Industrial Engineering, Stanford University, Stanford, California 94305
Armen Tekerian: IBM National Service Division, Franklin Lakes, New Jersey 07417

Interfaces, 1990, vol. 20, issue 1, 65-82

Abstract: IBM recently implemented Optimizer, a system for flexible and optimal control of service levels and spare parts inventory, in its US network for service support. It is based upon recent research in multi-echelon inventory theory to address the IBM network. The inherent complexity and very large scale of the basic problem required IBM to develop suitable algorithms and sophisticated data structures and required large-scale systems integration. Optimizer has greatly improved IBM's US service business. The implementation of Optimizer has made it possible to make strategic changes to the configuration and control of the parts distribution network. It resulted in simultaneously reducing inventory investment and operating costs and improving service levels. Most important, however, Optimizer has proven to be a highly flexible planning and operational control system.

Keywords: inventory/production: applications; industries: electric/electronic (search for similar items in EconPapers)
Date: 1990
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