Publication type: Article in scientific journal
Type of review: Peer review (publication)
Title: Inventory budget optimization : meeting system-wide service levels in practice
Authors: Korevaar, Peter
Schimpel, Ulrich
Bödi, Richard
DOI: 10.1147/rd.513.0447
Published in: IBM Journal of Research and Development
Volume(Issue): 51
Issue: 3.4
Pages: 447
Pages to: 464
Issue Date: 2007
Publisher / Ed. Institution: IEEE
Publisher / Ed. Institution: Armonk
ISSN: 0018-8646
Language: English
Subject (DDC): 658.5: Production management
Abstract: The work described in the literature on inventory and supply chain management has advanced greatly over the last few decades and now covers many aspects and challenges of applied supply chain management. In this paper we describe an approach that combines many of these academic aspects in a practical way to manage the spare parts logistics at a German automobile manufacturer. The basic problem is a single-echelon inventory problem with a system-wide service-level requirement and the possibility of issuing emergency orders. There exist two related optimization problems: One is to maximize the system-wide service level under the constraint of a given budget; the other is to minimize the budget for a given system-wide service level. The most important requirements and constraints considered are a detailed cost structure, different packaging sizes, capacity constraints, several storage zones, the decision whether or not to stock a product, stochastic lead times, highly sporadic demands, and the stability of the optimization result over time. Our approach has been implemented successfully in an automotive spare parts planning environment. The complete solution package integrates into the mySAP ERP®, the SAP Enterprise Resource Planning system, and APO 4.0, the SAP Advanced Planning and Optimization system. A detailed description of the model is given and results are presented.
Fulltext version: Published version
License (according to publishing contract): Licence according to publishing contract
Departement: School of Engineering
Organisational Unit: Institute of Data Analysis and Process Design (IDP)
Appears in Collections:Publikationen School of Engineering

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