University of Groningen. Inventory Control for Multi-location Rental Systems van der Heide, Gerlach

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1 University of Groningen Inventory Control for Multi-location Rental Systems van der Heide, Gerlach IMPORTANT NOTE: You are advised to consult the publisher's version (publisher's PDF) if you wish to cite from it. Please check the document version below. Document Version Publisher's PDF, also known as Version of record Publication date: 2016 Link to publication in University of Groningen/UMCG research database Citation for published version (APA): van der Heide, G. (2016). Inventory Control for Multi-location Rental Systems [Groningen]: University of Groningen, SOM research school Copyright Other than for strictly personal use, it is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license (like Creative Commons). Take-down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Downloaded from the University of Groningen/UMCG research database (Pure): For technical reasons the number of authors shown on this cover page is limited to 10 maximum. Download date:

2 Inventory Control for Multi-location Rental Systems Gerlach van der Heide

3 Publisher: University of Groningen Groningen, The Netherlands Printed by: Ipskamp Drukkers B.V. Enschede, The Netherlands ISBN: (printed version) (electronic version) c 2015, Gerlach van der Heide All rights reserved. No part of this publication may be reproduced, stored in a retrieval system of any nature, or transmitted in any form or by any means, electronic, mechanical, now known or hereafter invented, including photocopying or recording, without prior written permission from the copyright owner.

4 Inventory Control for Multi-location Rental Systems PhD thesis to obtain the degree of PhD at the University of Groningen on the authority of the Rector Magnificus Prof. E. Sterken and in accordance with the decision by the College of Deans. This thesis will be defended in public on Monday 1 February 2016 at hours by Gerlach van der Heide born on 1 October 1987 in Leeuwarden

5 Supervisor Prof. K.J. Roodbergen Co-supervisor Dr N.D. van Foreest Assessment committee Prof. G.J.J.A.N. van Houtum Prof. G.M. Koole Prof. R.H. Teunter

6 Preface In front of you lies the result of my four year PhD project. This has been a pleasant period in which I have greatly expanded my knowledge and, hopefully, have made a relevant contribution to both theory and practice. The process of writing this thesis has been enjoyable. While some research directions did not prove fruitful, I still managed to finish the thesis on time. There are various persons and organizations that I would like to acknowledge for their support during this period. It is important to first acknowledge the Dinalog, the Dutch Institute for Advanced Logistics. This thesis is part of the Dinalog project Cross-chain order fulfillment for internet sales under supervision of Kees Jan Roodbergen. Dinalog provided the funding for this project, together with library organization SIOB (Sectorinstituut Openbare Bibliotheken, now known as Koninklijke Bibliotheek) and several e-commerce businesses in the Netherlands. I am thankful that they gave me the opportunity to do academic research. My greatest thanks go to my main supervisor, Kees Jan Roodbergen. During my Research Master in Groningen I met Kees Jan, who offered me the opportunity to participate in the research project mentioned above. His enthusiasm always inspires me. During our weekly meetings, Kees Jan has greatly helped me by offering valuable suggestions, not only research related but also personally and for my future. As I plan to stay at the University of Groningen the upcoming years, I look forward to continue working together. Great thanks also go to my other supervisor, Nicky van Foreest. Regularly, Nicky and I sat together for hours discussing my research. As he has a wide range of interests, we also often discussed unrelated topics, of which joking about my Frisian descent was a favorite. The discussions could even become rather philosophical when Hans Nieuwenhuis joined. One of Nicky s notable achievements is converting me to

7 ii the Python programming language. I want to thank the reading committee, consisting of Geert-Jan van Houtum, Ger Koole, and Ruud Teunter, for their willingness to read through my thesis and for providing various helpful comments. Several other persons were involved in the library track of the project. I want to thank Iris Vis and Tom Steffens for joining me to various library conferences. Despite her busy schedule, Iris occasionally provided coaching, for which I am very grateful. During my PhD project I presented my research several times to library practitioners in expert meetings, conferences, and through publications in a popular magazine. Among others, I would like to thank Norma Verheijen, Ronald Spanier, and Frank Huijsmans for their valuable input and their enthusiasm, and Biblionet Groningen for supplying data of library loans. An important part of the enjoyment of doing a PhD project is hanging out with other PhD students. I would like to thank the PhD and postdoc students who joined the inventory sessions I organized every few weeks. These sessions were pleasant and insightful. Over the years, I have spent most time together with Arjan, Bart, Bram, Dennis, Marjolein, Minou, and Ward. I have very fond memories of playing Weerwolven together in the evening and at night during the yearly LNMB conference in Lunteren. Special thanks go to Arjan, with whom I work together on an e-commerce project, to Bram, who often joined me to conferences abroad, and to my exceptionally wise friend Ward, with whom I shared an office for almost 4 years. There are several groups of friends and family members that I still need to mention. Among others, for their company I want to thank my long-time friends Hillebrant, Peter, Ruben, and Wimer; my study friends Anko, Bert-Jan, and Wang; and the core of my high-school group of board game fanatics, Henry, Pieter, and Thijs. I commend my sister Jildou for her exceptional cooking skills and I hope my handicapped brother Jelmer continues to be as happy as in recent years. Finally, I am eternally thankful to my father and mother, Kees and Wikje, who are always there for me.

8 Contents 1 Introduction Inventory Control for Rental Systems The Public Library System in the Netherlands Literature on Rental Systems Contribution and Outline Transshipments and Repositioning in the Standard Single-echelon Rental System Introduction Problem Formulation Stochastic Dynamic Programming Formulation Clustering Heuristic Expected Shortage Reduction Heuristic Experimental Results Conclusion Optimizing Stock Levels in Rental Systems with a Support Depot Introduction Model and Assumptions Analytical Results Approximate Formulation Using Queueing Models Greedy Algorithm for Optimizing Base Stock Levels Experimental Results Conclusion

9 iv 4 Repositioning of Stock in Rental Systems with a Support Depot Introduction Model for Shipping and Repositioning Stock Examples of Optimal Shipment and Take-back Decisions Shipment Heuristics Take-back Heuristics Experimental Results Conclusion Optimal Policies for Rental Systems with Cross-docking via a Support Depot Introduction The Rental System with a Support Depot Single-location Problem Two-location Problem Heuristic Experimental Results Conclusion Summary and Conclusions Summary of Results Discussion Bibliography 151