A Tactical Planning Model for Managing Recoverable Items in Multi-Echelon Systems

Abstract

There are different potential uses for inventory models. One of the uses is to create budgets that can then be employed to guide purchases of items. Another application is the setting of target stock levels (order-up-to levels) that are the basis for purchasing items that have long procurement lead times. Models that are used for these purposes are called tactical planning models. These models are extensively used in military environments. Our goals are to study one such tactical planning model and to demonstrate how echelons interact when continuous review (s–1, s) policies are instituted.

In 1968, Sherbrooke [314]published a landmark paper in which he described a tactical planning model for the management of recoverable or repairable items called METRIC (Multi-Echelon Technique for Recoverable Item Control). The goal of the model was to provide a computationally tractable framework for planning budgets and procuring items for the U.S. Air Force. As we have discussed, the key to building models is the ability to calculate the distribution of the number of units in the resupply system. Unfortunately, establishing the exact probability distributions for these random variables in even two-echelon systems is not tractable for large numbers of items. Since these calculations are too computationally burdensome to be of practical use, Sherbrooke developed an approximation to this distribution that is easy to compute, and hence has been widely used in many applications.