A Simulation-based Analysis On Downtime Under Service Part Inventory Sharing

The level of competitiveness in many industrial sectors has escalated in recent yearsdue to globalization of economies and by the sharp fall of the consumer demand.Organizations in such a competitive environment strive to improve performance of theiroperations through implementation of new tactics that could in return improve their servicelevel and reduce costs. In particular, adopting new models of collaboration and partnershipswith their service providers or other organizations to tackle mutual obstacles may or maynot deliver expected results. Thus, it is common practice to investigate performance of anew approach with minimum investment cost while obtaining necessary evidence of itssustainability. However, attempts to validate improved processes are usually very costly toperform in a real-world for capital-intensive organizations or time consuming to developan analytical model. Therefore, utilization of simulation tools could help an organizationsave costs and verify new policies. The thesis provides an investigation on the inventorypooling approach under an agreement of a set of common parameters through utilizationof emergency lateral transshipments (ELT) among organizations. Such shipments withinan inventory pooling group contribute to reduction of machine downtime due to part failurewhile facing zero inventory onsite. However, the inventory pooling approach is not widelyimplemented due to several factors such as competition, unfair cost allocation andmismatched organization size. Discovering which general implications have an impact onthe performance of other members of the pooling group, may give an insight to furtherimprove attractiveness of the inventory pooling approach. The thesis will derive usefulrecommendations for both organizations and researchers on its applicability in decision-making processes within the supply-chain context.