Near-optimal heuristics to set base stock levels in a two-echelon distribution network

Basten, Rob; Houtum, van Gjjan Geert-Jan

doi:10.1016/j.ijpe.2011.10.018

Cited by 12 publications

(4 citation statements)

References 32 publications

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“…Since we consider the system in steady state, we suppress the time parameter in the state variables from now on, and we show their distributions in Lemma 1. The results in this lemma are very similar to the derivation of results for the standard twoechelon model for spare parts (see, e.g., Graves, 1985;Basten and van Houtum, 2013…”

Section: Discussionsupporting

confidence: 79%

Fleet readiness: Stocking spare parts and high-tech assets

Basten

Arts

2017

IISE Transactions

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We consider a maintenance shop that is responsible for the availability of a fleet of assets; e.g., trains. Unavailability of assets may be due to active maintenance time or unavailability of spare parts. Both spare assets and spare parts may be stocked in order to ensure a certain fleet readiness, which is the probability of having sufficient assets available for the primary process (e.g., running a train schedule) at any given moment. This is different from guaranteeing a certain average availability, as is typically done in the literature on spare parts inventories. We analyze the corresponding system, assuming continuous review and base stock control. We propose an algorithm, based on a marginal analysis approach, to solve the optimization problem of minimizing holding costs for spare assets and spare parts. Since the problem is not item separable, even marginal analysis is time-consuming, but we show how to efficiently solve this problem. Using a numerical experiment, we show that our algorithm generally leads to a solution that is close to optimal and that it is much faster than an existing algorithm for a closely related problem. We further show that the additional costs that are incurred when the problem of stocking spare assets and spare parts is not solved jointly can be significant. A key managerial insight is that typically the number of spare assets to be acquired is very close to a lower bound that is determined only by the active maintenance time on the assets. It is typically not cost-effective to acquire more spare assets to cover spare parts unavailability.

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Section: Discussionsupporting

confidence: 79%

Fleet readiness: Stocking spare parts and high-tech assets

Basten

Arts

2017

IISE Transactions

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“…Because expedited shipments originate from one warehouse, there is overlap with twoechelon distribution systems. Basten and Van Houtum (2013) consider a two-echelon distribution system with base stock control, Poisson demand, and full backordering. The authors provide new properties of the steady-state costs and formulate a smart enumeration procedure and a heuristic to obtain near-optimal base stock levels.…”

Section: Literature Reviewmentioning

confidence: 99%

“…We subsequently model the system as a Markov chain and derive its steady-state costs. The notation used is similar to that of Basten and Van Houtum (2013) and Kranenburg and Van Houtum (2009) . We consider a single item rental system with one support warehouse and n local warehouses.…”

Section: Model and Assumptionsmentioning

confidence: 99%

Optimizing stock levels for rental systems with a support warehouse and partial backordering

Heide

Foreest

Roodbergen

2018

European Journal of Operational Research

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“…Until now, the policy tuning has been analyzed mostly in the systems with serial and arborescent topologies [25]. For instance, Basten and Houtum [26] studied near-optimal heuristics in serial production systems with backordering. Chang and Lu [27] investigated a similar model, yet with the loss of unsatisfied demand being accounted for.…”

Section: Related Workmentioning

confidence: 99%

Continuous Genetic Algorithms in the Optimization of Logistic Networks: Applicability Assessment and Tuning

Ignaciuk

Wieczorek

2020

Applied Sciences

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Globalization opens up new perspectives for handling goods distribution in logistic networks. However, establishing an efficient inventory policy is challenging by virtue of the analytical and computational complexity. In this study, the goods distribution process that was governed by the order-up-to policy, implemented in either a distributed or centralized way, was investigated in the logistic systems with complex interconnection topologies. Uncertain demand may be imposed at any node, not just at conveniently chosen contact points, with a lost-sales assumption that introduces a non-linearity into the node dynamics. In order to adjust the policy parameters, the continuous genetic algorithm (CGA) was applied, with the fitness function incorporating both the operational costs and customer satisfaction level. This study investigated how to select the parameters of the popular inventory management policy when operating in the non-trivial networked structures. Moreover, precise guidelines for the CGA tuning in the considered class of problems were provided and evaluated in extensive numerical experiments.

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Near-optimal heuristics to set base stock levels in a two-echelon distribution network

Cited by 12 publications

References 32 publications

Fleet readiness: Stocking spare parts and high-tech assets

Fleet readiness: Stocking spare parts and high-tech assets

Optimizing stock levels for rental systems with a support warehouse and partial backordering

Continuous Genetic Algorithms in the Optimization of Logistic Networks: Applicability Assessment and Tuning

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