Modeling lateral transshipments in multiechelon repairable-item inventory systems with finite repair channels

Abstract

This article concerns the problem of determining the optimal spare inventory level for a multiechelon repairable-item inventory system, which has several bases and a central depot. When an item fails, the failed item is replaced immediately if a spare is available at the base. If there is no spare item available at the base, it is requested as a lateral transshipment to another base that has a spare in stock. If an item is not available from any of the bases, the item is backordered until a spare becomes available. We propose a model to describe the behavior of the system and develop an algorithm to find the spare inventory level at each base, which minimizes the total expected cost of the system. The algorithm is illustrated using examples of various sizes.

Scope and purpose Repairable-items refer to components that are very expensive, critically important, and subject to infrequent failure. The navigational computer of a plane or subway cars are typical examples of the repairable-items. In multiechelon repairable-item inventory systems that cover extensive geographical regions, lateral transshipment between bases is often used for improved service levels. However, previous research of the lateral transshipments assumes infinite repair capacity and is less appropriate for most industrial systems, where it is resource constrained. In this paper, we propose a model and an algorithm to find the optimal spare level for the system with finite repair channels.