The Repair Kit Problem with positive replenishment lead times and fixed ordering costs

The Repair Kit Problem (RKP) concerns the determination of a set of items taken by a service engineer to perform on-site product support. Such a set is called a kit. Models developed in the literature have always ignored the lead times associated with delivering items to replenish the kit, thereby limiting the practical relevance of the proposed solutions. Motivated by a real life case, we develop a model with positive lead times to control the replenishment quantities of the items in the kit, and study the performance of (s, S) policies under a service objective. The choice for (s, S) policies is made in order to accommodate fixed ordering costs. We present a method to calculate job fill rates with exact expressions, and discuss a heuristic approach to optimize the reorder level and order-up-to level for each item in the kit. The empirical utility of the model is assessed on real world data from an equipment manufacturer and useful insights are offered to after-sales managers