Inventory control of service parts in the final phase

Inventory control of service parts in the final phase

0.00 Avg rating0 Votes
Article ID: iaor20023110
Country: Netherlands
Volume: 137
Issue: 3
Start Page Number: 497
End Page Number: 511
Publication Date: Mar 2002
Journal: European Journal of Operational Research
Authors: ,
Keywords: service
Abstract:

We consider an appliance manufacturer's problem of controlling the inventory of a service part in its final phase. That phase begins when the production of the appliance containing that part is discontinued (time 0), and ends when the last service contract on that appliance expires. Thus, the planning horizon is deterministic and known. There is no setup cost for ordering. However, if a part is not ordered at time 0, its price will be higher. The objective is to minimize the total expected undiscounted costs of replenishment, inventory holding, backorder, and disposal (of unused parts at the end of the planning horizon). We propose an ordering policy consisting of an initial order-up-to level at time 0, and a subsequent series of decreasing order-up-to levels for various intervals of the planning horizon. We present a method of calculating the optimal policy, along with a numerical example and sensitivity analysis.

Reviews

Required fields are marked *. Your email address will not be published.