Stock or Print? Impact of 3-D Printing on Spare Parts Logistics

Jing-Sheng Song () and Yue Zhang ()
Additional contact information
Jing-Sheng Song: Fuqua School of Business, Duke University, Durham, North Carolina 27708
Yue Zhang: Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802

Management Science, 2020, vol. 66, issue 9, 3860-3878

Abstract: We present a general framework to study the design of spare parts logistics in the presence of three-dimensional (3-D) printing technology. We consider multiple parts facing stochastic demands and adopt procure/manufacture-to-stock versus print-on-demand to highlight the main difference of production modes featured in traditional manufacturing and 3-D printing. To minimize long-run average system cost, our model determines which parts to stock and which to print. We find that the optimal 3-D printer’s utilization increases as the additional unit cost of printing declines and the printing speed improves. The rate of increase, however, decays, demonstrating the well-known diminishing returns effect. We also find the optimal utilization to increase in part variety and decrease in part criticality, suggesting the value of 3-D technology in tolerating large part variety and the value of inventory for critical parts. By examining the percentage cost savings enabled by 3-D printing, we find that, although the reduction in printing cost continuously adds to the value of 3-D printing in a linear fashion, the impact of the improvement of printing speed exhibits S-shaped growth. We also derive various structural properties of the problem and devise an efficient algorithm to obtain near optimal solutions. Finally, our numerical study shows that the 3-D printer is, in general, lightly used under realistic parameter settings but results in significant cost savings, suggesting complementarity between stock and print in cost minimization.

Keywords: 3-D printing; multiclass queues; (r, q) policy; spare parts inventory management; supermodular minimization (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://doi.org/10.287/mnsc.2019.3409 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:66:y:2020:i:9:p:3860-3878

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().