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

• Published in: Operations research Vol. 54; no. 6; pp. 1028 - 1040
• Main Authors: Deshpande, Vinayak, Iyer, Ananth V, Cho, Richard
• Format: Journal Article
• Language: English
• Published: Linthicum, MD INFORMS 01-11-2006; Institute for Operations Research and the Management Sciences
• Subjects: Age; Aircraft; Aircraft maintenance; Analysis; Applied sciences; Armed forces; Aviation; Coast Guard; Cost efficiency; Economics; Engine transmissions; Exact sciences and technology; General aspects; Inventories; Inventory; Inventory control; Inventory control, production control. Distribution; Inventory management; inventory: applications; Linear programming; Logistics; Maintenance; Maintenance management; maintenance policies; Management science; Mathematical programming; military: cost effectiveness; National security; Operational research and scientific management; Operational research. Management science; Operations research; OR Practice; Studies; Supply chain management; Supply chains; Warehouses; United States; United States > US; Operations research; Refeeding; Information use; Replenishment; Database; Inventory control; Sea traffic; National security; Cost lowering; Military; Mathematical programming; Contracting service; Energy analysis; inventory: applications; Statistical analysis; Decision support system; Empirical method; Maintenance; Police; maintenance policies; Airplane; military: cost effectiveness; State dependence; Aircraft; Contract; Logistics
• ISSN: 0030-364X; 1526-5463
• DOI: 10.1287/opre.1060.0327

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.