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Efficient Supply Chain Management at the U.S. Coast Guard Using Part-Age Dependent Supply Replenishment Policies

Krannert School of Management, Purdue University, West Lafayette, Indiana 47907
Krannert School of Management, Purdue University, West Lafayette, Indiana 47907
University of New Brunswick Saint John, Saint John, New Brunswick, Canada E2L 4L5
vinayak{at}mgmt.purdue.edu
aiyer{at}mgmt.purdue.edu
rcho{at}unbsj.ca

The United States Coast Guard (USCG), now part of the Department of Homeland Security, has the mission to secure the U.S. coastline using a combination of air and sea capabilities. This paper focuses on an application of operations research techniques at the USCG to improve the performance of its aircraft service parts supply chain. We focused on evaluating the supply chain benefits from linking the aircraft maintenance database with the aircraft parts inventory database. This required us to (a) develop an approach to link the databases and (b) use aircraft maintenance information to improve the inventory management of service parts at the USCG. We first used mathematical programming tools to merge the maintenance database with the demand database. We then developed state-dependent supply replenishment policies that use part-age information to manage the service parts supply chain. We show that one of the proposed policies permits analytic estimation of the benefits of linking the data sets. The impact of these inventory policies was evaluated using empirical demand data for 41 critical parts over a five-year period. Computational results suggest that our proposed policies can lead to significant reductions in inventory cost over the current system, as high as 70% for some parts. Based on the insights from this study, the USCG is currently contracting with commercial vendors to develop an operational database and decision-support implementation across all parts.

Subject classifications: inventory: applications; maintenance policies; military: cost effectiveness.
History: Received October 2003; revision received February 2005; accepted August 2005.

This article has been cited by other articles:

				K. Everingham, G. Polaski, F. Riedlin, M. Shirk, V. Deshpande, and A. V. Iyer Operations Research Enhances Supply Chain Management at the US Coast Guard Aircraft Repair and Supply Center Interfaces, January 1, 2008; 38(1): 61 - 75. [Abstract] [PDF]