A repairable item inventory system with diagnostic and repair service (Q1115337)

We consider an inventory system for repairable items where the stocking point also serves as a repair center for the failed items. Failed items in the field are delivered to the stocking point for repair and, at the same time, a demand for the same quantity of the failed items is generated. If the stocking point has stock on hand, then no delay is incurred for the demand. Otherwise the demand is backordered. The failed items are then inspected at the repair center to determine whether the failures are repairable, or beyond repair, in which case the items are condemned. Because of the complexity of the product structure, the inspection time for the diagnosis of the repairability of the items can be random. From time to time, the repair center will have to replenish its stock from some external supplier or manufacturer, as condemned items will deplete the available stock there. Operating characteristics of such systems are explored. Moreover an efficient iterative algorithm for finding the stocking and ordering policies of such models is presented. A numerical result summarizing the behavior of the expected cost function as a function of the decision parameters is illustrated.