Meeting response time requirement in spare part support operation from inventory management perspective

The inventory management in spare part support operation receives new attentions due to the rapid growth of critical information systems and the express logistics industry. Contrary to the traditional spare part inventory management which is focused on the inventory policy of spare parts in the customer site for system maintenance, in the new context of spare part support operation, customers would procure service agreements instead of physical spares from producers. This difference drives the new requirements in inventory management for producers that need not only to manage the inventory level and the re-ordering point, but also to decide an effective inventory pool organization and the ways to handle the risk pooling effects in supporting requests with various service agreements. Our research aims to design the organization of the inventory pool and to propose an inventory reserve strategy that lies in the order processing procedure to handle the risk pooling effect. We proposed reserve strategies based on the marginal cost approach to protect the spare part for supporting the requests with higher service priority. The design of inventory organization pool and the proposed strategies were evaluated via mathematical models and experiments. As a result, it was shown that the consolidated inventory pool organization provided the cost saving of 5.8%, when compared with multiple pools organization. The cost saving would be extended up to 11.5% by using the proposed reserve strategy while maintaining the same service levels.