Spare parts inventory management with delivery lead times and rationing

Abstract

We study the spare parts service system of a major semiconductor equipment manufacturer facing two kinds of orders of different criticality. The more critical down orders need to be supplied immediately, whereas the less critical maintenance orders allow a given demand lead time to be fulfilled. For this system, we propose a policy that rations the maintenance orders. Under a one-for-one replenishment policy with backordering and for Poisson demand arrivals for both classes, we first derive expressions for the service levels of both classes and then conduct a computational study to illustrate superior system performance compared to a system without rationing. We also conduct a case study with 64 representative parts and show that significant savings are possible through incorporation of demand lead times and rationing.