Generalized spare ordering policies with random lead time (Q1067968)

Generalized ordering policies for a spare unit with general life time and lead time distributions are considered. Introducing the costs of ordering, shortage, and holding, we derive the expected cost rate and the cost effectiveness. We show that the generalized ordering policy minimizing the cost rate or maximizing the cost effectiveness is either one of the two typical ordering policies: (1) the original unit is replaced as soon as the ordered spare is delivered, or (2) the delivered spare is put into inventory until the original unit fails. Some properties regarding the optimum ordering policy and the optimum ordering time are also presented.