Multi-Echelon Inventory Optimization with Service Differentiation at Volvo Group
(2024) MIOM05 20241Department of Mechanical Engineering Sciences
Production Management
- Abstract
- Title: Multi-Echelon Inventory Optimization with Service Differentiation at Volvo Group.
Authors: Oscar Frölund & Holger Hjortstam.
Supervisors: Johan Marklund, Lund University. Philip Mårtensson & Christian Beckers,
Volvo Group.
Background: Within inventory control the distribution of spare parts poses multiple challenges. Being a critical area from a business perspective this is a field of great interest for Volvo Group. Currently the company utilizes a single-node optimization approach for the multi stage distribution network and they would like to investigate the potential value of using a holistic multi-echelon approach.
Purpose: This thesis project aims to investigate the impact of applying a recently developed... (More) - Title: Multi-Echelon Inventory Optimization with Service Differentiation at Volvo Group.
Authors: Oscar Frölund & Holger Hjortstam.
Supervisors: Johan Marklund, Lund University. Philip Mårtensson & Christian Beckers,
Volvo Group.
Background: Within inventory control the distribution of spare parts poses multiple challenges. Being a critical area from a business perspective this is a field of great interest for Volvo Group. Currently the company utilizes a single-node optimization approach for the multi stage distribution network and they would like to investigate the potential value of using a holistic multi-echelon approach.
Purpose: This thesis project aims to investigate the impact of applying a recently developed service-differentiated multi-echelon omnichannel inventory control model in Volvos Service Market Logistics (SML) distribution network using discrete event simulation. More specifically, the study is based on a representative sample of items for the Group Trucks Operations (GTO) division from the Regional Distribution Center (RDC) in Johannesburg, South Africa.
Methodology: The methodology used in this master thesis consists of two main parts. Firstly, an exploratory research approach according to Höst et al. (2006) is conducted. This includes holding open interviews with selected Volvo employees, scrutinizing documentation and a literature review. Following this the second part of the methodology includes applying the four initial steps of an operational research framework presented by Hiller and Lieberman (2010). These steps include defining the problem, formulating and building an analytical model and testing the model through a numerical study.
Conclusions: The numerical study shows an average decrease of the expected inventory in the system by approximately 25 percent for the investigated items. This could be done while still on average maintaining the same fill rate as the currently used single-echelon model for a majority of the investigated items. In the cases where the fill rate is not met the negative deviation is small and lower than one percentage point on average in all cases. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9162352
- author
- Hjortstam, Holger LU and Frölund, Oscar LU
- supervisor
- organization
- course
- MIOM05 20241
- year
- 2024
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Service differentiation, multi echelon, omni channel, Inventory control, Supply Chain Management.
- other publication id
- 24/5293
- language
- English
- id
- 9162352
- date added to LUP
- 2024-06-24 09:45:15
- date last changed
- 2024-06-26 17:15:11
@misc{9162352,
abstract = {{Title: Multi-Echelon Inventory Optimization with Service Differentiation at Volvo Group.
Authors: Oscar Frölund & Holger Hjortstam.
Supervisors: Johan Marklund, Lund University. Philip Mårtensson & Christian Beckers,
Volvo Group.
Background: Within inventory control the distribution of spare parts poses multiple challenges. Being a critical area from a business perspective this is a field of great interest for Volvo Group. Currently the company utilizes a single-node optimization approach for the multi stage distribution network and they would like to investigate the potential value of using a holistic multi-echelon approach.
Purpose: This thesis project aims to investigate the impact of applying a recently developed service-differentiated multi-echelon omnichannel inventory control model in Volvos Service Market Logistics (SML) distribution network using discrete event simulation. More specifically, the study is based on a representative sample of items for the Group Trucks Operations (GTO) division from the Regional Distribution Center (RDC) in Johannesburg, South Africa.
Methodology: The methodology used in this master thesis consists of two main parts. Firstly, an exploratory research approach according to Höst et al. (2006) is conducted. This includes holding open interviews with selected Volvo employees, scrutinizing documentation and a literature review. Following this the second part of the methodology includes applying the four initial steps of an operational research framework presented by Hiller and Lieberman (2010). These steps include defining the problem, formulating and building an analytical model and testing the model through a numerical study.
Conclusions: The numerical study shows an average decrease of the expected inventory in the system by approximately 25 percent for the investigated items. This could be done while still on average maintaining the same fill rate as the currently used single-echelon model for a majority of the investigated items. In the cases where the fill rate is not met the negative deviation is small and lower than one percentage point on average in all cases.}},
author = {{Hjortstam, Holger and Frölund, Oscar}},
language = {{eng}},
note = {{Student Paper}},
title = {{Multi-Echelon Inventory Optimization with Service Differentiation at Volvo Group}},
year = {{2024}},
}