We investigate keeping dedicated stocks at customer sites in addition to stock kept at some central location as a tool for applying service differentiation in spare parts supply. We study the resulting two-echelon system in a multi-item setting, both under backordering and under emergency shipments assumptions (i.e. lost sales). In an extensive computational experiment, we show that dedicated stocks have significant added value: compared to an approach where all customers receive uniform service, we find average cost savings of 14% under backordering and 20% under emergency shipments. Furthermore, we find that dedicated stocks are comparable to critical level policies in terms of cost savings, while being much easier to implement in practice. Finally, we find further savings (20% under backordering, 23% under emergency shipments) by combining dedicated stocks and critical level policies in one aggregate differentiation strategy.

We investigate the use of priority mechanisms when assigning service engineers to customers as a tool for service differentiation.To this end, we analyze a nonpreemptive M/P H/c priority queue with various customer classes. For this queue, we present various accurate and fast methods to estimate the first two moments of the waiting time per class given that all servers are occupied. These waiting time moments allow us to approximate the overall waiting time distribution per class. We subsequently apply these methods to real-life data in a case study.

We derive approximations for the service levels of two-echelon inventory systems with lost sales and Poisson demand. Our method is simple and accurate for a very broad range of problem instances, including cases with both high and low service levels. In contrast, existing methods only perform well for limited problem settings, or under restrictive assumptions.