Expediting in Two-Echelon Spare Parts Inventory Systems

Problem definition: We consider dual sourcing in a distribution network for spare parts consisting of one central warehouse and multiple local warehouses. Each keeps types repairable to maintain several capital goods. The repair shop at the has two options each part: regular option an expedited option. Irrespective option, part uses certain resource its repair. In design these inventory systems, companies need decide on stocking levels expedite thresholds such that total stock investments are minimized while satisfying asset availability expediting constraints. Academic/practical relevance: Although most have possibility short supply, no contributions been made incorporate dynamic policies investment decisions. Anticipating decisions will be later leads substantial reductions investments. Methodology: use queueing theory determine performance subsequently find all warehouses using binomial disaggregation. For optimization problem, we develop greedy heuristic decomposition column generation based algorithm. Results: Both solution approaches perform very well with average optimality gaps 2.38 0.27%, respectively, across large test bed industrial size. failed is effective reducing 7.94% even up 19.61% relative state art. Managerial implications: Based case study Netherlands Railways, show how managers can significantly reduce when leveraged prioritize whose critically low.