Inventory optimization in high volume aerospace supply chains

Abstract

The supply chains of aerospace products can be complex, involving thousands of components per product and hundreds of vendors spaced out over an increasingly global landscape. Managing all inputs necessary for these complex aerospace supply chains is a task that is critical to the success of any firm and requires extensive planning, close partnerships, and detailed analysis. This thesis outlines a system for optimal safety stock management in high volume aerospace supply chains. Given such supply chain parameters as component inventory values, procurement and manufacturing lead times, demand distributions, and bills of material, the ideal safety stock locations and sizes which result in minimal overall inventory levels are calculated by a nonlinear optimization program. With this safety stock structure, aerospace firms can operate their supply chains with higher customer service rates and lower inventory levels. A methodology is also developed to help aerospace companies improve their existing supply chains as efficiently as possible. Considering the limited time and resources available, a company may not be able to enhance all areas of its operations and determining where to improve with the greatest effect on customer service levels and inventory can be difficult. The framework developed provides general guidelines to ensure improvement resources are being deployed most efficiently. Finally, business environment and operations considerations are discussed to aid companies in the process of implementing supply chain improvements and instituting organizational change.