Journal
NAVAL RESEARCH LOGISTICS
Volume 56, Issue 8, Pages 730-744Publisher
WILEY
DOI: 10.1002/nav.20376
Keywords
supply chain design; service parts inventory systems; response time requirements
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Funding
- NSF [DMI-0621433]
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We study the problem of designing a two-echelon spare parts inventory system consisting of a central plant and a number of service centers each serving a set of customers with stochastic demand. Processing and storage capacities at both levels of facilities are limited. The manufacturing process is modeled as a queuing system at the plant. The goal is to optimize the base-stock levels at both echelons, the location of service centers, and the allocation of customers to centers simultaneously, subject to service constraints. A mixed integer nonlinear programming model (MINLP) is formulated to minimize the total expected cost of the system. The problem is NP-hard and a Lagrangian heuristic is proposed. We present computational results and discuss the trade-off between cost and service. (C) 2009 Wiley Periodicals, Inc. Naval Research Logistics 56: 730-744, 2009
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