Customer Information Driven After Sales Service ... - RePub

2. After Sales Service
such that either the DC or CDC echelon is not present. The role of CDC or DC is to
support the FSLs for replenishment or emergency shipments. The choice of having a CDC
echelon or DC echelon is often dependent on the consideration of savings by inventory
pooling at CDC vs. the ability of DCs to support FSLs in a responsive manner. It
is also observed that, in some instances, a designated DC is exclusively used to fulfill
emergency shipments. Cohen and Agrawal (1999) also discuss the emerging trends in
logistics network design. The authors highlight that there is a gradual shift from multiechelon
structures to single echelon structures with direct shipments from supplier(s)
to FSLs and lateral transshipments among FSLs. It is also observed that there are
two approaches for spare parts stocking in the DC echelon vs. FSL echelon. The first
approach is a forward parts deployment strategy with few DCs but more FSLs. The
second approach is a delivery intensive centralized approach with a higher number of
DCs and fewer FSLs. Tailored or hybrid networks are often observed in situations where
the companies have mixed product lines, a geographically dispersed customer base with
heterogeneous characteristics and variations in product/part cost.
In the academic literature, the early work on network design or facility location
is discussed by Magnanti and Wong (1985), Drezner (1995) and Ghiani et al. (2004).
This work focusses on finding regional equilibrium points to place stocking facilities
of appropriate size, while considering demand rates, fixed and variable facility operating
costs and transportation costs. Related work in this area also studies service constrained,
stochastic, or reliability based problems. In addition, there are studies that discuss the
effects of taxes, exchange rates, transfer prices, market prices, supplier reliability, and
lead time uncertainty in single echelon or multi echelon contexts (Bundschuh et al., 2003;
Vidal and Goetschalckx, 2000). For details of the earlier work, we refer the reader to
the aforementioned reviews. The primary limitation of the earlier studies is that aspects
of inventory management policies and multiple service deadlines are not considered. As
discussed by Candas (2007), neglecting these aspects results in considerable losses. Such
aspects are very relevant in a spare parts logistics context. In this respect, Candas
(2007) accommodates the aspects of a one-for-one inventory replenishment policy and
time based service level constraints in a single echelon network design formulation. The
author also provides a computationally efficient solution procedure that is based on
Lagrangian relaxation. Recent reviews on facility location problems that accommodate
these spare parts logistics characteristics are provided by Snyder (2006) and Candas
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