Comparison of policies of emergency lateral transshipment for inventory systems

Abstract

With the increasing air travel, the stocking of service parts at various airline bases and depots becomes crucial. Inability to meet demands for service parts will result in delays and inevitably lead to increased costs for the airlines. As such, there is a need for optimal inventory policies and systems. This project compares some inventory policies with regard to emergency lateral transshipment through simulation modelling.

A two-echelon service parts system based on Axsäter’s model, consisting of a number of bases and one depot was analysed in this study. The performance measure of interest is the fill rate of these bases. Four inventory policies were examined: highest stock on hand in the pool of 3 bases; least parts in repair in the pool; least number of parts in repair-to-(initial inventory level at base)2 ratio in pooling group; and that on varying the critical level n for emergency lateral transshipment. The last policy gave the best results when the critical level n=1, i.e. the greatest increase in fill rate at the bases compared to the original model created.