Research Of Downward Substitution Spare Parts Inventory Strategy Based On Emergency Lateral Transshipments

Nowadays, industrial equipment designing and manufacturing have achieved a high degree of modularization and integration, this has brought the rapid development of spare parts, and spare parts logistics has been focused on and researched by many scholars. Service spare parts have some unique properties, such as downward substitution, high stock-holding cost and so on. These properties make customers demand forecasted difficultly. Because of limited forecasted ability, distributors cannot make correct ordering policies before a selling season started. In the terminal stage of selling season, inventory imbalance situations appeared in external and internal distributors frequently. In order to solve this problem, this paper considered two distributors in single echelon and two products which are downward substitution. Take downward substitution spare parts and distributors’ internal and external inventory imbalance as the research background. The purpose of this paper is maximizing distributors’ local profits. In this paper, we discussed price difference, substitution rate, transshipment cost and transshipment rate, and analyze how they affect distributors’ ordering policies and profits. Based on reasonable assumptions, we built mathematical models respectively with Emergency Lateral Transshipments(ELT), Downward Substitution(DS) and both of ELT and DS. Through model analysis and simulation by Matlab, This paper draws the following conclusion:(1) When ELT or DS is used separately, distributors’ profits have a certain degree of increase, and ELT is better than DS.(2) In combination with ELT and DS, distributors’ profits have increased significantly.The question of researched in this paper was put forward from real background. We built reasonable and correct mathematical models, and then, verified the validity of the model by numerical simulation analysis. This paper has the following innovation points:(1) combined ELT and DS, we built related models.(2) in the supply chain with multiproduct, we introduction the concept of price difference, analyzed the effects of price difference to distributors’ order decision and related profit. In this paper, we dealt the problem with mathematical process, and transfer the mathematical meaning into management meaning in the reality, provided distributors with optimal order policy. We verified the model can improve the service level of distributors by mathematical simulation, and can effectively establish competition and cooperation relationship between distributors, not only has realized the distributors’ profit function Pareto optimization, at the same time, also effective to establish the Risk-pooling Effect between distributors.