SBIR Phase II: Optimal Replenishment Algorithms for Service Parts Logistics Systems

This Small Business Innovation Research Phase II Project will develop prototype software to provide optimal real time purchase and repair replenishment, and allocation of service spare parts used to provide after-sales support to mission-critical products. It will design, develop and test advanced optimization algorithms to ensure that the right part is ordered from the right source in the right quantity at the right time and then allocated to the right location. In Phase III these engines will be incorporated in MCA Solutions planned commercial enterprise software product Replenishment and Allocation Optimizer (RAO) and complement MCA Solutions current product Service Parts Optimizer (SPO). The use of this tool will result in higher availability of service parts, increase products uptime and lower expense in service parts inventory. The target industries for this solution will be Defense, Aerospace, and manufacturers of Automotive, Computer, Telecommunications and Hi-Tech equipment. RAO will be the first commercial software product to support near real time optimization of inventory management in service supply chains. The requirement allocation optimizer software market is underdeveloped. The size of this opportunity is significant. Over 1,100 companies in the United States generate sales higher than $250 M/year in the original equipment manufacturer segment. Combined sales in this sector are $3.3 trillion with total inventory investment in service parts of about $250 Billion. Service parts inventory accounts for about 5 to 10% of product sales for an OEM. The technology has the potential to reduce these investments by 20% to 40 which in turn may pass some of the reductions to the customers.