Skip to main content

Multi-Echelon Inventory Performance Evaluation: The Case of a Communications Company

  • Chapter
  • First Online:
  • 4443 Accesses

Abstract

The optimal deployment of inventory is a vital business function for a firm. The well-documented benefits of running manufacturing operation, or offering services, with leaner inventory range from a permanent reduction in working capital to increased sales and higher customer satisfaction. In this paper some models to assess multi-echelon inventory performance are presented. Particularly, the case of a communication company is described in which inventory levels and replenishment strategies are applied to the different echelons taking into consideration their mutual interactions. Some performance indexes, like inventory cost and service level, are considered and a simulation model is built to delve deeper into system issues.

This is a preview of subscription content, log in via an institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

References

  • Albright S (1989) An approximation to the stationary distribution of a Multi-echelon repairable-item inventory system with finite sources and repair channels. Nav Res Logist 36(2):179–195

    Article  Google Scholar 

  • Albright S, Gupta A (1993) Steady-state approximation of a multi-echelon multi-indentured repairable-item inventory system with a single repair facility. Nav Res Logist 40(4):479–493

    Google Scholar 

  • Al-Rifai MH, Rossetti MD (2007) An efficient heuristic optimization algorithm for a two-echelon (R, Q) inventory system. Int J Prod Econ 109(1–2):195–213

    Article  Google Scholar 

  • Axsäter S (1990) Modeling emergency lateral transshipments in inventory systems. Manage Sci 36(11):1329–1338

    Article  Google Scholar 

  • Axsäter S (1993) Continuous review policies for multi-level inventory systems with stochastic demand. In: Graves S, Rinnooy Kan A, Zipkin P (eds) Logistics of production and inventory. North Holland, Amsterdam

    Google Scholar 

  • Balana A, Gross D, Soland R (1989) Optimal provisioning for single-echelon repairable item inventory control in a time-varying environment. IIE Trans 21(3):202–212

    Article  Google Scholar 

  • Ben-Daya M, Raouf A (1994) Inventory models involving lead times as a decision variable. J Oper Res Soc 45(5):579–582

    Google Scholar 

  • Bier IJ, Tjelle JP (1994) The importance of interoperability in a simulation prototype for spares inventory planning. In Proceedings of the 1994 Winter Simulation Conference, Lake Buena Vista, FL, 11–14 December

    Google Scholar 

  • Blazer D, Rippy D (1988) Modified Dyna-METRIC: Finding the Least Cost Mix of Wartime Spares. Air Force Logistics Command Wright-Patterson Afb Oh Reports, Accession Number: ADA194776

    Google Scholar 

  • Burton J, Banerjee A (2005) Cost-parametric analysis of lateral transshipment policies in two-echelon supply chains. Int J Prod Econ 93–94:169–178

    Article  Google Scholar 

  • Chopra S, Rao MR, Tsai CY (1998) Computational study of the multi-echelon production planning problem. Nav Res Logist 44(1):1–19

    Article  Google Scholar 

  • Cohen M, Kleindorfer P, Lee H, Pyke D (1992) Multi-item service constrained (s, S) policies for spare parts logistics. Nav Res Logist 39(4):561–577

    Article  Google Scholar 

  • Dada M (1992) A two-echelon inventory system with priority shipments. Manage Sci 38(8):1140–1153

    Article  Google Scholar 

  • Daryanani S, Miller D (1992) Calculation of steady-state probabilities for repair facilities with multiple sources and dynamic return priorities. Oper Res 40(2):248–256

    Article  Google Scholar 

  • Diaz A, Fu CM (1995) Multi-echelon models for repairable items: a review. Working Paper, University of Maryland, Maryland

    Google Scholar 

  • Diaz A, Fu CM (1997) Models for multi-echelon repairable item inventory systems with limited repair capacity. Eur J Oper Res 97(3):480–492

    Article  Google Scholar 

  • Diks EB, de Kok AG, Lagodimos AG (1996) Multi-echelon systems: a service measure perspective. Eur J Oper Res 95(2):241–263

    Article  Google Scholar 

  • Federgruen A (1993) Centralized planning models. In: Graves SC, Rinnooy Kan A, Zipkin P (eds) Logistics of production and inventory. North Holland, Amsterdam

    Google Scholar 

  • Graves SC (1985) A multi-echelon inventory model for a repairable item with one for-one replenishment. Manage Sci 31(10):1247–1256

    Article  Google Scholar 

  • Graves SC (1996) A multi-echelon inventory model with fixed replenishment intervals. Manage Sci 42(1):1–18

    Article  Google Scholar 

  • Gross D, Gu B, Soland R (1993) Iterative solution methods for obtaining steady state probability distributions of Markovian Multi-echelon repairable items inventory systems. Comput Oper Res 20(8):817–828

    Article  Google Scholar 

  • Gross D, Miller D, Soland R (1983) A closed queueing network model for multi-echelon repairable item provisioning. IIE Trans 15(4):344–352

    Article  Google Scholar 

  • Gross D, Miller D, Soland R (1987) A network decomposition approach for approximate steady state behavior of Markovian multi-echelon repairable item inventory systems. Manage Sci 33(11):1453–1468

    Article  Google Scholar 

  • Hill RM, Seifbarghy M, Smith DK (2007) A two-echelon inventory model with lost sales. Eur J Oper Res 181(2):753–766

    Article  Google Scholar 

  • Hillestad RJ (1982) Dyna-METRIC: dynamic multi-echelon technique for recoverable item control. Rand Publication Series, R-2785-AF

    Google Scholar 

  • Jung W (1993) Recoverable inventory systems with time-varying demand. Prod Inventory Manage J 34(1):77–81

    Google Scholar 

  • Jung SK (2003) Modeling lateral transshipments in multi-echelon repairable-item inventory systems with finite repair channels. Comput Oper Res 30:1401–1417

    Article  Google Scholar 

  • Kennedy WJ, Patterson WJ, Fredendall LD (2002) An overview of recent literature on spare parts inventory. Int J Prod Econ 76(2):201–215

    Article  Google Scholar 

  • Kim JS, Choi DO (2005) Productivity measurement and evaluation models with application to a military Ramp. Int J Technol Manage 32(3–4):408–436

    Google Scholar 

  • Lau HC, Song H (2008) Multi-echelon repairable item inventory system with limited repair capacity under non-stationary demands. Int J Inventory Res 1(1):67–92

    Article  Google Scholar 

  • Lee HL (1987) A multi-echelon inventory model for repairable items with emergency lateral transshipment. Manage Sci 33:1302–1338

    Article  Google Scholar 

  • Lee CB (2003) Multi-echelon inventory optimization. University of Stanford Global Supply Chain Management Forum: Evant White Papers Series. Available: http://www.stanford.edu

  • McGee JB, Rossetti MD, Mason SJ (2004) Simulating transportation practices in multi-indenture multi-echelon (MIME) systems. In Proceedings of the 2004 Winter Simulation Conference, Washington DC, 5–8 December

    Google Scholar 

  • Moinzadeh KA (2002) Multi-echelon inventory system with information exchange. Manage Sci 48(3):414–426

    Article  Google Scholar 

  • Moinzadeh KA, Lee HL (1986) Batch size and stocking levels in multi-echelon repairable systems. Manage Sci 32(12):1567–1581

    Article  Google Scholar 

  • Muckstadt J (1973) A model for multi-item, multi-echelon, multi-indenture inventory system. Manage Sci 20(4):472–481

    Article  Google Scholar 

  • Muckstadt J, Roundy R (1993) Analysis of multistage production systems. In: Graves SC, Rinnooy Kan A, Zipkin P (eds) Logistics of production and inventory. North Holland, Amsterdam

    Google Scholar 

  • Muckstadt J, Thomas L (1980) Are multi-echelon inventory models worth implementing in systems with low-demand rates? Manage Sci 26(5):483–494

    Article  Google Scholar 

  • Murphy VJ (February 2007) Multi-echelon supply chains: multy-inventory, multi-problems. Available: http://www. toolsgroup.com

  • Nahmias S, Smith SA (1994) Optimizing inventory levels in a two echelon retailer system with partial lost sales. Manage Sci 4:582–596

    Article  Google Scholar 

  • Pyke D (1990) Priority repair and dispatch policies for reparable-item logistics systems. Nav Res Logist 37(1):1–30

    Article  Google Scholar 

  • Reiser M (1981) Mean-value analysis and convolution method for queue-dependent servers in closed queuing networks. Perform Eval 1(1):7–18

    Article  Google Scholar 

  • Schmenner R (1981) Production/operations management. Concepts and situations. SRA, Chicago, IL

    Google Scholar 

  • Sherbrooke C (1968) METRIC: a multi-echelon technique for recoverable item control. Oper Res 16(2):122–141

    Article  Google Scholar 

  • Sherbrooke C (1971) An evaluator for the number of operationally ready aircraft in a multilevel supply system. Oper Res 19(3):618–635

    Article  Google Scholar 

  • Sherbrooke C (1986) VARI-METRIC: improved approximation for multi-indenture, multi-echelon availability models. Oper Res 34(2):311–319

    Article  Google Scholar 

  • Sherbrooke C (1992) Optimal inventory modeling of systems. Wiley and Sons, New York

    Google Scholar 

  • Simon R (1971) Stationary properties of a two-echelon inventory model for low demand items. Oper Res 19(3):761–773

    Article  Google Scholar 

  • Slay FB (1996) Optimizing spares support: the aircraft sustainability model. Technical Report, Logistics Management Institute, McLean, VA

    Google Scholar 

  • Sleptchenko A, van der Heijden MC, van Harten A (2002) Effects of finite repair capacity in multi-echelon, multi-indenture service part supply systems. Int J Prod Econ 79(3):209–230

    Article  Google Scholar 

  • Suri R, Sanders J, Kamath M (1993) Performance evaluation of production networks. In: Graves SC, Rinnooy Kan A, Zipkin P (eds) Logistics of production and inventory. North Holland, Amsterdam

    Google Scholar 

  • Svoronos A, Zipkin P (1991) Evaluation of one-for-one replenishment policies for multi-echelon inventory systems. Manage Sci 37(1):68–83

    Article  Google Scholar 

  • Wang H, Xie J, Li C (2008) Optimal model for multi-echelon inventory system based on GAAA algorithms. Proc Int Symp Comput Intell Des 1:426–431

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Mosè Gallo .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2010 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Gallo, M., Guerra, L., Naviglio, G. (2010). Multi-Echelon Inventory Performance Evaluation: The Case of a Communications Company. In: Taticchi, P. (eds) Business Performance Measurement and Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-04800-5_19

Download citation

Publish with us

Policies and ethics