Service Differentiation

  • Geert-Jan van Houtum
  • Bram Kranenburg
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 227)


As in Chaps.  2 and 3, we analyze a multi-item, single-location inventory model. In this chapter, we assume that the installed base consists of machines of the same machine type, but these machine are classified in multiple machine groups, each with their own target for the aggregate mean waiting time. We again assume that emergency shipments are being used when stockouts occur. For the inventory control of the spare parts, we assume critical level policies. We apply Dantzig-Wolfe decomposition, which gives both a Dantzig-Wolfe heuristic and a corresponding lower bound for the optimal costs, and we describe exact solution procedures for the underlying, single-item inventory problem. In a computational experiment, we show that the Dantzig-Wolfe heuristic performs well, and we compare the use of critical level policies to a so-called round-up policy. The latter comparison is also made in a case study at ASML.


Critical Level Spare Part Fill Rate Demand Rate Restrict Master Problem 
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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Geert-Jan van Houtum
    • 1
  • Bram Kranenburg
    • 2
  1. 1.Eindhoven University of TechnologyEindhovenThe Netherlands
  2. 2.Consultants in Quantitative Methods CQM B.V.EindhovenThe Netherlands

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