In equipment-intensive industries such as truck manufacturing, electronics manufacturing, photo copiers, and airliners, service parts are often slow moving items for which, in some cases, the transshipment time is not negligible. However, this aspect is hardly considered in the existing spare parts literature. We assess the effect of non-negligible lateral transshipment time on various aspects of spare parts inventory control. Furthermore, we introduce customer-oriented service levels by taking the uncommitted pipeline stocks into account. A case study in the dredging industry shows that lateral transshipment may lead to lower system performance, which supports the results from some recent studies. Furthermore, we find that considerable savings can be obtained when we include the uncommitted pipeline stocks in both base stock allocation and lateral transshipment decisions.

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Erasmus School of Economics
Econometric Institute Research Papers
Report / Econometric Institute, Erasmus University Rotterdam
Erasmus School of Economics

Yang, G., & Dekker, R. (2010). Service Parts Inventory Control with Lateral Transshipment that Takes Time (No. EI 2010-02). Report / Econometric Institute, Erasmus University Rotterdam (pp. 1–22). Retrieved from