Pooling through lateral transshipments in service parts systems

Satir B., SAVASANERIL S., Serin Y. Y.

EUROPEAN JOURNAL OF OPERATIONAL RESEARCH, vol.220, no.2, pp.370-377, 2012 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 220 Issue: 2
  • Publication Date: 2012
  • Doi Number: 10.1016/j.ejor.2012.02.009
  • Journal Name: EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.370-377
  • Keywords: Inventory, Lateral transshipment, Service parts, Optimal control of queueing networks, DECENTRALIZED DEALER NETWORKS, INVENTORY SYSTEMS, OPTIMAL POLICY, SUPPLY CHAIN, SUBSTITUTIONS, MODEL
  • Middle East Technical University Affiliated: Yes

Abstract

We study the inventory management problem of a service center operating in a decentralized service parts network. The service centers collaborate through inventory and service pooling, and through sharing information on the inventory status. Upon demand arrival, a service center may request a part from the other center, in which case a payment is made. Under this competitive and collaborative environment, we first characterize the optimal operating policy of an individual service center. Through computational analysis we identify the conditions under which pooling is most beneficial to the service center, and make an assessment of different pooling strategies which are commonly adopted in practice and in the literature. Finally, we analyze the effect of interaction between the centers on the benefit of pooling. (C) 2012 Elsevier B.V. All rights reserved.