Customer Information Driven After Sales Service ... - RePub

2.4. Tactical Decisions for After Sales Service Management
system level (Rustenburg et al., 2001). The initial METRIC formulations do not handle
batch ordering. Various researchers such as Deuermeyer and Schwarz (1981); Svoronos
and Zipkin (1988); Moinzadeh and Lee (1986); Lee and Moinzadeh (1987b,a); Axsäter
et al. (2002); Axsäter (2003); Axsäter and Marklund (2008) have presented approximations
to handle batch ordering in METRIC formulation. It has been shown that the
approximation solution provided by Axsäter and Marklund (2008) performs even better
than the echelon and installation (r, Q) policies.
Despite these developments in the academic literature for spare parts inventory planning,
the use of the above solutions in practice is limited. Many companies often use
simple methods that estimate the inventory requirements by using demand over replenishment
lead time as a basis. The focus of these methods is towards inventory availability
instead of inventory planning optimization. Though such methods provide short term
solutions by ensuring the availability of stocks; in the long term, the problem is compounded
by low inventory turnover rates and high obsolescence rates. There are many
limitations originating in practical situations that inhibit companies from using optimization
methods. Data availability and quality are two such limitations. In addition,
modeling assumptions also have a role to play. Most of the optimization models assume
one uninterrupted and uncapacitated external supply source. In reality, this assumption
is often violated. Typically, there are multiple suppliers for one spare part type.
These suppliers are often limited by their production capacities and their commitments
to other business partners. Moreover, the demand volume is linked to the size of the
service provider’s installed base. Any sudden changes in installed base size consequently
affect the demand patterns. Pince and Dekker (2009) discuss the potential interventions
to mitigate sudden demand changes for single stock location and continuous review inventory
policy settings. The problem is unaddressed for periodic inventory policies and
more complex network configurations.
2.4.3 Returns Disposition Planning
The returns disposition decision or product recovery decision relates to the potential
future use of the incoming returned spare part. In the reverse logistics literature, a recent
review has been provided by Sasikumar and Kannan (2008a, 2009). The disposition
decision is typically defined as follows: depending on the state of the returned product,
35