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UBC Theses and Dissertations

Airline network inventory control policy : an application of Markov Decision Processes and Simulation Biswanger, Kyle Adrian

Abstract

In this thesis an airline network inventory control policy is developed. The inventory problem being faced differs from traditional hierarchical inventory problems. In this problem the inventory system is composed of a network of warehouses where demand is observed between warehouses and inventory "consumed" from one warehouse is "provided" to another. The control policy is developed using two modeling techniques: Dynamic Programming and Simulation. Dynamic programming, or Markov Decision Processes, is used to help define a control policy. The limitations imposed by the use of Dynamic Programming are overcome by implementing the results in a Simulation model. The policy resulting from this analysis demonstrates the potential to save $390,000 per year with minimal operational impact to Canadian Airlines International. This represents a 60% reduction in non-service related equipment movements.

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