Date of this Version
Int. J.Production Economics128 (2010) 393–403; doi:10.1016/j.ijpe.2010.07.034
The adoption of open architecture has several economic implications in the life of an asset, including developmental, production, storage, training and maintenance costs. This research responds to an inquiry by the Program Executive Officer— Integrated Weapons System (US Department of the Navy) regarding the value of open architecture (OA) in the design of complex assets. With this intent, we evaluate how the inventory allocation of spare engines for the F-16 operations in the continental United States would be affected with and without the adoption of open architecture, focusing on the benefits of inventory pooling to meet the demand of many users from a small number of storage sites. We use a distance-constrained version of the Ardalan heuristic for solving the facility location problem, responding to practical limitations exposed by the model. This article shows that open architecture may provide substantial supply chain cost reduction, and simplification of the distribution network when combined with proper inventory storage policies.