Rationing policies in a spare parts inventory system with customers differentiation

Chaaben Kouki*, Christian Larsen

*Corresponding author for this work

    Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

    Abstract

    We consider a spare parts inventory system controlled by a base-stock policy. We assume several demand classes, where the demands of each class follow a compound Poisson process, and a stochastic replenishment lead-time common to all classes. For this inventory system, we investigate two rationing policies that can be employed when the inventory level is critically low. The first policy is the reservation policy, where a part of the stock is reserved for high priority demand classes, whereas the second one is new, which we call a threshold policy, and accepts demands of a given class until the pipeline stock caused by the particular class (plus the amount of the incoming order) reaches a critical level. On average, for 8% (12%) of all instances, the threshold policy performs better than the reservation policy under the full (partial) lost sales case and when the objective is to minimise the average on-hand inventory subject to fill rate service requirements. Furthermore, in many cases where the reservation policy outperforms the threshold policy, the gap between the two policies is small under both service requirements and total cost minimisation criteria. This suggests that a trade-off between ‘fairness’ and ‘cost’ is required, and that when the performance of two policies are similar, the threshold policy is generally favoured.

    Original languageEnglish
    JournalInternational Journal of Production Research
    Volume59
    Issue20
    Pages (from-to)6270-6290
    Number of pages21
    ISSN0020-7543
    DOIs
    Publication statusPublished - Oct 2021

    Keywords

    • Inventory
    • Markov chain
    • base-stock
    • compound poisson processes
    • prioritisation of customer classes

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