1 Reducing the mean supply delay of spare parts using lateral transshipments policies L. TIACCI * and S. SAETTA Università di Perugia, Dipartimento di Ingegneria Industriale, ITALY ABSTRACT Lateral transshipment has been studied lately as a promising policy for increasing the performances of multi-echelon spare parts inventory system. By lateral transshipment spare parts can be moved from one location with excess inventory to another location, at the same echelon, in shortage, with the aim of reducing supply delays of spare parts. This paper examine the relative effectiveness of two lateral shipments approaches in reducing the mean supply delay (MSD) of a non repairable item, with respect to a classical policy of no lateral shipments. A simulation model of a two echelon supply network has been implemented and an experiment has been performed by varying different parameters of the supply network, such as the number of warehouses (locations at the lower echelon), the supply lead time from the central depot, the spare parts demand uncertainty, and the size variability of the warehouses. Results show appreciable reductions of MSD when lateral shipments are allowed with respect to the classical policy, in almost every network configuration. KEYWORDS: Lateral transshipment, spare parts, inventory pooling. 1. Introduction The improvements in information technology coupled with the substantial reduction in the cost of processing, storing and analyzing data have made sharing of inventories more attractive. Furthermore, logistics companies (and in particular express carriers) have made the rapid movement of parts from one place to another possible and more affordable. For this reason, the possibility to share stocks between those locations, in the supply chain, that have to face the final demand (through transshipments from locations still having adequate stock * Corresponding Author: Dr. Lorenzo Tiacci, Phd Via Duranti 67 - 06125 Perugia - ITALY tel. +39-075-5853741; fax +39-075-5853736 email: lorenzo.tiacci@unipg.it