Some Approximations in Multi-Item, Multi-Echelon Inventory Systems for Recoverable Items.

by J. A. Muckstadt

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To solve the optimization problem formulated in the METRIC model the optimal Lagrangian multiplier associated with a given budget constraint must be determined. For large inventory systems this task is not trivial. Fox and Landi proposed a method that was an improvement over the original METRIC algorithm. This paper develops a method for estimating the value of the optimal Lagrangian multiplier used in the Fox-Landi algorithm, presents alternative ways for determining stock levels and compares them with the Fox-Landi algorithm using two hypothetical inventory systems. The comparison shows that computational time can be reduced by nearly 50 percent. The paper also suggests a simple approximation method for estimating the optimal depot stock level. When this was applied to the two hypothetical inventories it was found that the estimate of optimal depot stock is quite close to the optimal value in all cases. The author suggests that the proposed methods are so simple and accurate that implementation would be beneficial to the requirements computation system for recoverable spares by the Air Force. 34 pp. Ref.

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