United States Department of Transportation
i
Applying Optimization to Marine Corps Decision Making for Repairable Item Lateral Redistribution Policy
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2001-11-01
[PDF-841.34 KB]
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Abstract:We demonstrate some of the immediate cost benefits of centrally managing a multi-site inventory of common repairable parts originally managed as separate stocks. First, we modify the basic transportation problem to determine the lowest global cost for redistributing parts between the multiple stockage points. Our initial solution results in a $3.7 million reduction is purchasing costs. Next. we show that by developing a consolidated shipments model, we are able to reduce the cost to fill demand, with available stock, by 20%. We also highlight how we determine per unit and consolidated shipment costs, and essential data elements for this type of model. Finally, we conduct sensitivity analysis on the model output to show how a central stock manager can make tradeoff decisions between cost and readiness.
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