Management of multi-item, multi-group inventories with multiple criteria under service level constraints

Abstract A group of 306 spare parts items in a transport organisation are classified into nine subgroups, based on multiple criteria. Each subgroup is assigned a specified service level under constraints. The inventory system total variable cost is evaluated and plotted against weighted service level for different valid combinations of service levels, chosen from accountably infinite possible combinations by an extreme value methodology suggested in this paper. The results indicate the existence of a number of local minima and a global minimum for the total variable cost curve. Also, the total variable cost is seen to be bounded in a region yielding a minimum cost curve. The identification of this global minimum cost curve is a pointer to effective minimum cost inventory management of groups of spare parts.