Paper Info
Title
Customer differentiated end-of-life inventory problem.
Abstract
This paper deals with the service parts end-of-life inventory problem in a circumstance that demands for service parts are differentiated. Customer differentiation might be due to criticality of the demand or based on various service contracts. In both cases, we model the problem as a finite horizon stochastic dynamic program and characterize the structure of the optimal inventory policy. We show that when customers are differentiated based on the demand criticality then the optimal structure consists of time and state dependent threshold levels for inventory rationing. In case of differentiation based on service contracts, we show that in addition to rationing thresholds we also need contract extension thresholds by which the system decides whether to offer an extension to an expiring contract or not. By numerical experiments in both cases, we identify the value of incorporating such decisions in service parts end-of-life inventory management with customer differentiation. Moreover, we show that these decisions not only result in cost efficiency but also decrease the risk of part obsolescence drastically. (C) 2012 Published by Elsevier B.V.
Year
DOI
Venue
2012
10.1016/j.ejor.2012.03.034
European Journal of Operational Research
Keywords
Field
DocType
End-of-life inventory,Spare parts,Customer differentiation
Obsolescence,State dependent,Actuarial science,Spare part,Perpetual inventory,Inventory theory,Operations research,Rationing,Criticality,Business,Cost efficiency
Journal
Volume
Issue
ISSN
222
1
0377-2217
Citations 
PageRank 
References 
3
0.43
11
Authors
2
Name
Order
Citations
PageRank
Morteza Pourakbar1262.73
Rommert Dekker2763101.60