Spare Parts Supply Chain Shipment Decision Making in a Deterministic Environment

Abstract

Determining the optimal lot size is a well discussed problem across many industries. This paper suggests a deterministic approach to shipment decision taking in a deterministic environment of spare parts supply chain. The model considered a deterministic forecast for the incoming faulty units. An objective function was modeled by taking in consideration three main elements: the number of malfunctioned units, the shipping cost and the storage cost. A deterministic forecast allowed calculating the cost effective schedule of shipments and its lot sizes. The purpose of this paper it to study the reverse logistics supply chain of a typical telecom devices company (that offers warranty/repairing services) and try to reduce its transportation and handling costs in order to bring added-value to the customer and by doing so, expand the competitive advantage of the company.