Cataloged from PDF version of article.For maintenance and quality assessment purposes, various performance levels for both systems and components are identified, usually as a function of the deterioration. In this study, we consider a multicomponent system where the lifetime of each component is described by several stages, (0,…,S), which are further classified as good, doubtful, preventive maintenance due (PM due) and down. A control policy is suggested where the system is replaced when a component enters a PM due or a down state and the number of components in the doubtful states (K,…,S−2) is at least N. All maintenance activities are assumed to take negligible time. The exact description of the underlying stochastic model under the policy is very complicated. We therefore propose some approximations, which allow an explicit expression for the long run average cost function, which is minimized w.r.t. (K,N) by numerical methods. Sensitivity of the model to system parameters and the performance of the approximation are investigated through several examples

In 2001, Deere's Commercial and Consumer Equipment (C&CE) Division, with growing sales of $3 billion, set out to improve its on-time delivery from plants to dealers and to reduce its inventory while maintaining customer service levels. C&CE used state-of-the-art inventory optimization techniques embedded in SmartOps' multistage inventory planning and optimization (MIPO) product to set trustworthy weekly inventory targets. C&CE used these targets, together with appropriate dealer incentives, to transform to a pull system and exceed its goals. With 2,500 dealers, 100 product families, and a 26-week planning horizon, Deere's application of multiechelon inventory optimization may be the largest example of applied stochastic inventory theory in practice in a multiagent environment. With the enterprise-wide system integration, Deere improved its factories' on-time shipments from 63 percent to 92 percent, while maintaining customer service levels at 90 percent. Between 2001 and 2003, Deere reduced or avoided inventory by $890 million, improving annual shareholder value added (SVA) by $107 million. By the end of 2004, the C&CE Division will exceed its goal in $1 billion of inventory reduction or avoidance, a year ahead of schedule.

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