Spare parts inventory pooling : how to share the benefits?

F.J.P. Karsten, R.J.I. Basten

Research output: Book/ReportReportAcademic

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Abstract

We consider a stock point for expensive, low-usage items that is operated by multiple decision makers. Each faces a Poisson demand process, and the joint stock point is controlled by a continuous-review base stock policy with full backordering. We consider penalty costs for backorders and holding costs for stock on hand. For this model, we derive structural properties of the resulting cost function. We use these to prove not only that it is cost effective to share one stock point with all parties involved, but also that collaboration (inventory pooling) can be supported by a stable cost allocation, i.e., the core of the associated cooperative game is non-empty. These results hold under optimized and under exogenously given base stock levels. For the former case, we further identify a stable cost allocation that would be easy to implement in practice and that induces players to reveal their private information truthfully.
Original languageEnglish
Place of PublicationEindhoven
PublisherTechnische Universiteit Eindhoven
Number of pages51
Publication statusPublished - 2012

Publication series

NameBETA publicatie : working papers
Volume372
ISSN (Print)1386-9213

Fingerprint

Inventory pooling
Spare parts
Costs
Cost allocation
Base stock
Cooperative game
Continuous review
Backorder
Private information
Decision maker
Cost function
Base-stock policy
Penalty
Structural properties

Cite this

Karsten, F. J. P., & Basten, R. J. I. (2012). Spare parts inventory pooling : how to share the benefits? (BETA publicatie : working papers; Vol. 372). Eindhoven: Technische Universiteit Eindhoven.
Karsten, F.J.P. ; Basten, R.J.I. / Spare parts inventory pooling : how to share the benefits?. Eindhoven : Technische Universiteit Eindhoven, 2012. 51 p. (BETA publicatie : working papers).
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Karsten, FJP & Basten, RJI 2012, Spare parts inventory pooling : how to share the benefits? BETA publicatie : working papers, vol. 372, Technische Universiteit Eindhoven, Eindhoven.

Spare parts inventory pooling : how to share the benefits? / Karsten, F.J.P.; Basten, R.J.I.

Eindhoven : Technische Universiteit Eindhoven, 2012. 51 p. (BETA publicatie : working papers; Vol. 372).

Research output: Book/ReportReportAcademic

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Karsten FJP, Basten RJI. Spare parts inventory pooling : how to share the benefits? Eindhoven: Technische Universiteit Eindhoven, 2012. 51 p. (BETA publicatie : working papers).