Time-differentiated service parts distribution: Costs under hierarchical and non-hierarchical setups

Requirements for equipment support services can vary significantly depending on the consequences of an equipment failure. A time-based service differentiation allows customers to choose different time limits within which a service can be provided. Focusing on service parts distribution, this paper investigates the effects of different service time limits and their fractions in overall demand on inventory, transportation and distribution network setup costs. An analytical model is presented for this investigation considering a hierarchical and a non-hierarchical organization of service parts stocking facilities.