Multi-Item Two-Echelon Spare Parts Inventory Control Problem with Batch Ordering in the Central Warehouse

Topan, Engin
In this dissertation, we consider a multi-item two-echelon inventory distribution system in which the central warehouse operates with (Q, R) policy, and each local warehouse implements base-stock policy. The objective is to find the policy parameters minimizing the relevant system-wide costs subject to an aggregate mean response time constraint at each facility. We first propose an exact solution procedure based on a branch-and-price algorithm to find the relevant policy parameters of the system considered. Then, we propose four alternative heuristics to find the optimal or near-optimal policy parameters of large practical-size systems. The first heuristic, which we call the Lagrangian heuristic, is based on the simultaneous approach and relies on the integration of a column generation method and a greedy algorithm. The other three heuristics are based on the sequential approach, in which first the order quantities are determined using a batch size heuristic, then the reorder levels at the central warehouse and the basestock levels at the local warehouses are determined through the same method used for the Lagrangian heuristic. We also propose a lower bound for the system-wide cost. Later, we extend our study to compound Poisson demand. The performance of the Lagrangian heuristic is found to be extremely well and improves even further as the number of parts increases. Also the computational requirement of the heuristic is quite tolerable. This makes the heuristic very promising for large practical industry-size problems. The performance of the sequential heuristics is also satisfactory, but not as much as the Lagrangian heuristic.
Citation Formats
E. Topan, “Multi-Item Two-Echelon Spare Parts Inventory Control Problem with Batch Ordering in the Central Warehouse,” Ph.D. - Doctoral Program, Middle East Technical University, 2010.