Effects of finite repair capacity in multi-echelon, multi-indenture service part supply systems

In this paper, we consider multi-echelon, multi-indenture supply systems for repairable service parts with finite repair capacity. We show that the commonly used assumption of infinite capacity may seriously affect system performance and stock allocation decisions if the repair shop utilisation is relatively high. Both for the case of item-dedicated and shared repair shops, we modify the well-known VARI-METRIC method to allocate service part stocks in the network. The repair shops are modelled by (single or multi-class) multi-server queuing systems. We validate our procedure by comparison to results from discrete event simulation. This comparison shows that the accuracy of the technique presented in this article is on average more than five times as close to simulated values as the classical VARI-METRIC technique.