Multi-item two-echelon spare parts inventory control problem with batch ordering in the central warehouse under compound Poisson demand

Date

2012-8

Author

Topan, E
Bayındır, Zeynep Pelin

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We consider a multi-item two-echelon spare part inventory system in which the central warehouse operates under an (nQ, R) policy and the local warehouses implement order-up-to S policy, each facing a compound Poisson demand. The objective is to find the policy parameters minimizing expected system-wide inventory holding and fixed ordering costs subject to an aggregate mean response time constraint at each warehouse. In this paper, we propose four alternative approximations for the steady state performance of the system; and extend a heuristic and a lower bound proposed under Poisson demand assumption to the compound Poisson setting. In a computational study, we show that the performances of the approximations, the heuristic, and the lower bound are quite satisfactory; and the relative cost saving of setting an aggregate service level rather than individually for each part is quite high. Journal of the Operational Research Society (2012) 63, 1143-1152. doi: 10.1057/jors.2011.125 Published online 30 November 2011

Subject Keywords

Heuristics, Two-echelon, Multi-item, Batch ordering, Compound poisson demand, System approach

URI

https://hdl.handle.net/11511/28233

Journal

Journal of the Operational Research Society

DOI

https://doi.org/10.1057/jors.2011.125

Collections

Department of Industrial Engineering, Article

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Heuristics for multi-item two-echelon spare parts inventory control subject to aggregate and individual service measures Topan, Engin; Bayındır, Zeynep Pelin; Tan, Tarkan (Elsevier BV, 2017-01-01) We consider a multi-item two-echelon spare parts inventory system in which the central warehouse operates under a (Q, R) policy and local warehouses implement (S-1,S) policy. The objective is to find the policy parameters minimizing expected system-wide inventory holding and fixed ordering subject to aggregate and individual response time constraints. Using an exact evaluation we provide a very efficient and effective heuristic, and also a tight lower bound for real-world, large-scale two-echelon spare part...
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Citation Formats

E. Topan and Z. P. Bayındır, “Multi-item two-echelon spare parts inventory control problem with batch ordering in the central warehouse under compound Poisson demand,” Journal of the Operational Research Society, pp. 1143–1152, 2012, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/28233.