Emergency Supply Alternatives for a Storage Facility of a Repairable Multi-Component System

This paper studies a continuous-review stochastic replenishment model for a multi-component system with regular and emergency orders. The system consists of N parallel and independent components, each of which has a finite life span. In addition, there is a warehouse with a limited stock of new components. Each broken component is replaced by a new component from the stock. When no component is available, an emergency supply is ordered. The stock is managed according to an (Formula presented.) policy, which is a combination of an (Formula presented.) policy for the regular order and a (Formula presented.) policy for the emergency order. The regular order is delivered after an exponentially distributed lead time, whereas the emergency order is delivered immediately. We study three sub-policies for emergency orders, which differ from each other in size and in relation to the regular order. Applying the results from queueing theory and phase-type properties, we derive the optimal thresholds for each sub-policy and then compare the economic benefit of each one.