Modeling repair demand in existence of a nonstationary installed base

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dc.authorid0000-0001-9446-0582
dc.authorid0000-0002-5639-0648
dc.contributor.authorHekimoğlu, Mustafaen_US
dc.contributor.authorKarlı, Denizen_US
dc.date.accessioned2023-06-12T06:13:51Z
dc.date.available2023-06-12T06:13:51Z
dc.date.issued2023-09
dc.departmentIşık Üniversitesi, Mühendislik ve Doğa Bilimleri Fakültesi, Matematik Bölümüen_US
dc.departmentIşık University, Faculty of Engineering and Natural Sciences, Department of Mathematicsen_US
dc.descriptionThis research is funded by TUBITAK 3501 National Young Researchers Career Development Program with the grant number 118M477 . Authors are thankful to Ali Kök for his help in organizing our code base that we use in our numerical experiments.en_US
dc.description.abstractLife cycles of products consist of 3 phases, namely growth, maturity, and decline phases. Modeling repair demand is particularly difficult in the growth and decline stages due to nonstationarity. In this study, we suggest respective stochastic models that capture the dynamics of repair demand in these two phases. We apply our theory to two different operations management problems. First, using the moments of spare parts demand, we suggest an algorithm that selects a parametric distribution from the hypergeometric family (Ord, 1967) for each period in time. We utilize the algorithm in a single echelon inventory control problem. Second, we focus on investment decisions of Original Equipment Manufacturers (OEMs) to extend economic lifetimes of products with technology upgrades. Our results indicate that the second moment is sufficient for growing customer bases, whereas using the third moment doubles the approximation quality of theoretical distributions for a declining customer base. From a cost minimization perspective, using higher moments of demand leads to savings up to 13.6% compared to the single-moment approach. Also, we characterize the optimal investment policy for lifetime extension decisions from risk-neutral and risk-averse perspectives. We find that there exists a critical level of investment cost and installed base size for profitability of lifetime extension for OEMs. From a managerial point of view, we find that a risk-neutral decision maker finds the lifetime extension problem profitable. In contrast, even a slight risk aversion can make the lifetime extension decision economically undesirable.en_US
dc.description.sponsorshipTUBITAK 3501 National Young Researchers Career Development Programen_US
dc.description.versionPublisher's Versionen_US
dc.identifier.citationHekimoğlu, M. & Karlı, D. (2023). Modeling repair demand in existence of a nonstationary installed base. International Journal of Production Economics, 263, 1-13. doi:10.1016/j.ijpe.2023.108923en_US
dc.identifier.doi10.1016/j.ijpe.2023.108923
dc.identifier.endpage13
dc.identifier.issn0925-5273
dc.identifier.issn1873-7579
dc.identifier.scopus2-s2.0-85160762899
dc.identifier.scopusqualityQ1
dc.identifier.startpage1
dc.identifier.urihttps://hdl.handle.net/11729/5568
dc.identifier.urihttp://dx.doi.org/10.1016/j.ijpe.2023.108923
dc.identifier.volume263
dc.identifier.wosWOS:001015115000001
dc.identifier.wosqualityQ1
dc.indekslendigikaynakWeb of Scienceen_US
dc.indekslendigikaynakScopusen_US
dc.indekslendigikaynakScience Citation Index Expanded (SCI-EXPANDED)en_US
dc.institutionauthorKarlı, Denizen_US
dc.institutionauthorid0000-0002-5639-0648
dc.language.isoenen_US
dc.peerreviewedYesen_US
dc.publicationstatusPublisheden_US
dc.publisherElsevier B.V.en_US
dc.relation.ispartofInternational Journal of Production Economicsen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/closedAccessen_US
dc.subjectInstalled baseen_US
dc.subjectInventory theory and controlen_US
dc.subjectNonstationary demanden_US
dc.subjectSpare partsen_US
dc.subjectStochastic methodsen_US
dc.subjectDecision makingen_US
dc.subjectInventory controlen_US
dc.subjectInvestmentsen_US
dc.subjectLife cycleen_US
dc.subjectProfitabilityen_US
dc.subjectRepairen_US
dc.subjectStochastic control systemsen_US
dc.subjectStochastic systemsen_US
dc.subjectCustomerbaseen_US
dc.subjectInventory theoryen_US
dc.subjectLifetime extensionen_US
dc.subjectModel repairen_US
dc.subjectNon-stationary demanden_US
dc.subjectOriginal equipment manufacturersen_US
dc.subjectSpare parts logisticsen_US
dc.subjectInventory controlen_US
dc.subjectStock controlen_US
dc.subjectUpgradabilityen_US
dc.subjectInformationen_US
dc.subjectSystemen_US
dc.titleModeling repair demand in existence of a nonstationary installed baseen_US
dc.typeArticleen_US

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