Shrinking profit margins in the high technology industry has led companies to attempt to increase profits through an increased focus on after-market services. As part of that effort, service parts logistics, which manages the post-sales distribution of spare parts needed to maintain and repair products in use, has gained importance. In an effort to improve Service Parts Logistics (SPL) operations, we integrate facility location and inventory stocking decisions while classifying facilities based on their assignment; dedicated facilities that are assigned solely to individual customers (located on-site of the customer, serving only that customer), and shared facilities that are assigned to a subset of customers. The high cost of spare parts motivates inventory sharing, and dedicated facilities are required by high priority customers such as hospitals, airports, etc. because they do not accept stock-outs or long lead times. Our objective is to identify the optimal shared and dedicated facilities to be opened and stocked subject to time based service level constraints.

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