Time-differentiated distribution of service parts and repair materials: an investigation of service time, area partitions, and cost relations

Jat, Mohsin Nasir (2015) Time-differentiated distribution of service parts and repair materials: an investigation of service time, area partitions, and cost relations. PhD thesis, University of Nottingham.

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Motivation: Manufacturers in sectors like Information Technology (IT), Automotive and Aerospace have increasingly become focused on providing after sales services. One of the forms of after sales services is to provide service parts (or spare parts) to customers within different contracted time windows. Commonly offered by large scale IT sector companies, such services are facilitated by Service Parts Logistics (SPL) systems through a network of parts stocking facilities. The number of stocking facilities in a distribution network affects the service responsiveness and service costs related to inventory, transportation and facility set-up. Higher responsiveness can be attained through increasing the number of facilities in a distribution network, which, in turn, usually increases inventory cost. Generally, studies assume that shorter service time windows result in higher costs, but there is a lack of exploration regarding how reductions in service time limits and changes in the fractions of demand for different time-based service types impact on various service related costs. Service area partitioning (or zoning) is another related issue which is unexplored in general facility location literature when considering multiple service time (or distance) constraints and both inventory and transportation costs.

This study is mainly motivated by SPL systems of IT equipment manufacturers that support the provision of service parts at customer sites under different and short service time commitments in a large geographical area. The study is of a generic nature and generates insights that can be relevant for any case where the service responses are provided within different short time windows and involve the provision (or consumption) of some stocks (e.g. emergency infrastructure repairs).

Aim and methodology: The aim of this work is to investigate relationships between time-based service levels, service costs and service zones/areas under a hierarchical organization and a non-hierarchical organization of service facilities. The hierarchical organization has variable capabilities to meet different time-based requirements, while the non-hierarchical organization has a uniform capability to meet the toughest requirement for the entire customer base. The investigation is mainly done through analytical, simulation and optimization modelling with the view of producing answers that provide a general understanding and practical insights rather than producing situation specific optimization models. Empirical case studies are also conducted to complement the quantitative modelling work so that the research is not divorced from the reality. The case studies point towards the motivation for the modelling study and its relevance to some of the real-world systems, and provide a broader understanding of the issues being researched. The case studies involve two multinational ICT equipment manufacturers and service provides, and a government agency responsible for providing highway emergency services in England.

Key findings: The results from the modelling experiments show that under the non-hierarchical setup, where all facilities provide the full range of service-times in their respective vicinities, inventory and transportation costs are insensitive to the fractions of demand for different time-based service types. However, with an inventory sharing mechanism under the non-hierarchical setup, the increase in the proportion of demand for the service within the longer time window can increase the service availability level while also increasing the average travelling. On the other hand, under the hierarchical setup, which provides a higher level of centralization when there is demand for the service in the longer time window, inventory and transportation costs react to the proportions of demand for different time-based service types. The hierarchical setup results in higher transportation cost compared to the non-hierarchical setup, and, interestingly, does not necessarily lower the inventory level, especially when the overall demand rate is very low. The simulation of the inventory sharing mechanism under the hierarchical setup shows that, in several cases, inventory sharing can not only increase the service availability level, but can also reduce transportation cost.

The analysis based on the optimization models shows that there can be cases where it is more cost effective to serve all demand, regardless of the required service time, in a similar fashion through a non-hierarchical setup. The results also show that the demand fractions for different time-based service types, and inventory and transportation costs can significantly impact on the optimum organization of service zone. There can be distinct optimum patterns of service zones depending on whether the inventory cost or the transportation cost dominates.

Item Type: Thesis (University of Nottingham only) (PhD)
Supervisors: Muyldermans, L.
MacCarthy, B.L.
Keywords: Business logistics, Customer services, Physical distribution of goods, Management
Subjects: H Social sciences > HF Commerce
Faculties/Schools: UK Campuses > Faculty of Social Sciences, Law and Education > Nottingham University Business School
Item ID: 28408
Depositing User: Jat, Mohsin
Date Deposited: 21 Sep 2015 12:45
Last Modified: 16 Sep 2016 00:55
URI: http://eprints.nottingham.ac.uk/id/eprint/28408

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