Service Parts Inventory Control with Lateral Transshipment that Takes Time

Guangyuan Yang and Rommert Dekker

No EI 2010-02, Econometric Institute Research Papers from Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute

Abstract: In equipment-intensive industries such as truck manufacturing, electronics manufacturing, photo copiers, and airliners, service parts are often slow moving items for which, in some cases, the transshipment time is not negligible. However, this aspect is hardly considered in the existing spare parts literature. We assess the effect of non-negligible lateral transshipment time on various aspects of spare parts inventory control. Furthermore, we introduce customer-oriented service levels by taking the uncommitted pipeline stocks into account. A case study in the dredging industry shows that lateral transshipment may lead to lower system performance, which supports the results from some recent studies. Furthermore, we find that considerable savings can be obtained when we include the uncommitted pipeline stocks in both base stock allocation and lateral transshipment decisions.

Keywords: METRIC; customer-oriented service level; inventory control; lateral transshipment (search for similar items in EconPapers)
Date: 2010-03-29
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Working Paper: Service Parts Inventory Control with Lateral Transshipment that takes Time (2010)
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