Improving the computational efficiency of metric-based spares algorithms

David R. Nowicki, Wesley S. Randall, Jose Emmanuel Ramirez-Marquez

    Research output: Contribution to journalArticlepeer-review

    24 Scopus citations

    Abstract

    We propose a new heuristic algorithm to improve the computational efficiency of the general class of Multi-Echelon Technique for Recoverable Item Control (METRIC) problems. The objective of a METRIC-based decision problem is to systematically determine the location and quantity of spares that either maximizes the operational availability of a system subject to a budget constraint or minimizes its cost subject to an operational availability target. This type of sparing analysis has proven essential when analyzing the sustainment policies of large-scale, complex repairable systems such as those prevalent in the defense and aerospace industries. Additionally, the frequency of these sparing studies has recently increased as the adoption of performance-based logistics (PBL) has increased. PBL represents a class of business strategies that converts the recurring cost associated with maintenance, repair, and overhaul (MRO) into cost avoidance streams. Central to a PBL contract is a requirement to perform a business case analysis (BCA) and central to a BCA is the frequent need to use METRIC-based approaches to evaluate how a supplier and customer will engage in a performance based logistics arrangement where spares decisions are critical. Due to the size and frequency of the problem there exists a need to improve the efficiency of the computationally intensive METRIC-based solutions. We develop and validate a practical algorithm for improving the computational efficiency of a METRIC-based approach. The accuracy and effectiveness of the proposed algorithm are analyzed through a numerical study. The algorithm shows a 94% improvement in computational efficiency while maintaining 99.9% accuracy.

    Original languageEnglish
    Pages (from-to)324-334
    Number of pages11
    JournalEuropean Journal of Operational Research
    Volume219
    Issue number2
    DOIs
    StatePublished - 1 Jun 2012

    Keywords

    • Inventory
    • Logistics
    • Optimization
    • Outcome based contracting
    • Performance based logistics
    • Supply chain

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