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Registration:
This course is postponed till 2026.
You can already fill in the pre-registration form below.
Objectives:
After the course, students should be able to:
Course description:
Inventory theory is one of the key theories within operations management. In much of state-of-the-art research, inventories play an important role; for example, Song, Van Houtum, and Van Mieghem (M&SOM, 2020) find that inventories play a role in 33% of the papers published in M&SOM in the years 1999-2018. Hence, knowledge on fundamental inventory models is important for every scholar in the field of operations management. In this course, we discuss two types of inventory models:
The first part is based mostly on Chapters 2 and 5 of the book of Van Houtum and Kranenburg (2015). In spare parts inventory problems, the focus is generally on the system availabilities of the machines for which spare parts are taken on stock. This leads to multi-item inventory models with various types of system-oriented service level constraints. We show how to derive efficient solutions in a single-location setting with one type of customer, and we formulate heuristics. Next, we study a single-echelon, multi-location setting with lateral transshipments, We also show how these models can be and actually are applied in practice, and how new developments in practice are reflected in the development of new models and algorithms.
The second part is based on Chapters 4 and 8 of Porteus (2002). We study a periodic review inventory system and prove the optimality of base-stock policies. Then we study how sub-modularity can be used to investigate monotonicity of optimal base-stock levels with respect to problem parameters in the context of capacity constraints. We also study how systems with lost-sales rather than backorders are fundamentally different for positive lead-times.
We use two course days per part. Per part, the first course day is used to present the existing theory, while the second course day is focused on recent papers and open research problems. For the recent papers, we look mostly at papers published in FT50 journals (OR, MS, M&SOM, POM, JOM) and we discuss the excellence of these papers.
Connection with the course “Quantitative Modelling and Analysis of Supply Chains QMASC)”:
This course is about inventories in general and focuses on structural results and real applications for single-echelon inventory systems. The course QMASC has a focus on multi-echelon production/inventory systems where stocking location along a supply chain replenish each other.
Assignment:
Program:
First lecture day: Spare parts inventory models (dr. Basten): Prior to this lecture, we suggest to read Van Houtum and Kranenburg (2015), Chapter 1 and certainly Sections 2.1 through 2.5. In Chapter 2, the basic multi-item spare parts model is analyzed. This basic model forms a basis for the models in later chapters that we discuss during the day. The basic model will be discussed only briefly in class.
Second lecture day: Presentations of students on recent advances on spare parts inventory control followed by discussions. Students will be assigned a paper and for this paper they need to present, focusing on certain aspects to be explained at the first lecture day
Third lecture day: Periodic review single-location inventory models. Prior to this lecture, students should be familiar with Chapters 1-3 of Porteus (2002). During the lecture we cover Chapters 4 and 8, proving the optimality of base-stock policies from first principles on a blackboard.
Fourth lecture day: Presentations of students on recent advances for the lost sales inventory problem followed by discussions. Students will be assigned a paper and for this paper they need to present, focusing on certain aspects to be explained at the third lecture day.
Literature:
Methodology:
Course material:
Van Houtum, G.J., & Kranenburg, B. (2015). Spare parts inventory control under system availability constraints (Vol. 227). Springer. (Mostly Chapters 1, 2, and 5). It can be downloaded at http://www.springer.com/cn/book/9781489976086.
Basten, R., & van Houtum, G.J. (2023). Spare parts inventory planning. In Research Handbook on Inventory Management (pp. 455-475). Edward Elgar Publishing. (Summarizing the most relevant parts of Van Houtum & Kranenburg, 2015).
Related papers. (To be studied for the homework assignments.)
Porteus, E. L. (2002). Foundations of stochastic inventory theory. Stanford University Press.
Prerequiste: