An inventory sharing and allocation method for a multi-location service parts logistics network with time-based service levels

Number: 007-0663 An Inventory Sharing and Allocation Method for a Multi-location Service Parts Logistics Network with Time-based Service Levels Erhan Kutanoglu Graduate Program in Operations Research and Industrial Engineering Department of Mechanical Engineering The University of Texas at Austin [email protected] POMS 18th Annual Conference Dallas, Texas, U.S.A. May 4 to May 7, 2007 Abstract We consider a model to allocate stock levels at warehouses in a service parts logistics network. The network is a two-echelon distribution system with one central warehouse with infinite capacity and a number of local warehouses, each facing Poisson demands from geographically dispersed customers. Each local warehouse uses a potentially different base stock policy. The warehouses are collectively required to satisfy time-based service targets: Certain percentages of overall demand need to be satisfied from facilities within specified time windows. These service levels not only depend on the distance between customers and the warehouses, but also depend on the part availabilities at the warehouses. Moreover, the warehouses share their inventory as aWe consider a model to allocate stock levels at warehouses in a service parts logistics network. The network is a two-echelon distribution system with one central warehouse with infinite capacity and a number of local warehouses, each facing Poisson demands from geographically dispersed customers. Each local warehouse uses a potentially different base stock policy. The warehouses are collectively required to satisfy time-based service targets: Certain percentages of overall demand need to be satisfied from facilities within specified time windows. These service levels not only depend on the distance between customers and the warehouses, but also depend on the part availabilities at the warehouses. Moreover, the warehouses share their inventory as a