Stable Spare Parts Pooling for Military Weapon Systems

Abstract

We study under which circumstances Departments of Defenses should be willing to deploy a joint parts part pooling program for their major weapon systems. Using cooperative game theory and Markov Decision Processes, we demonstrate that the type of pooling strategy plays a crucial role in the success of such a joint spare parts pool. More precisely, we show that a joint spare parts pool may not last long -- or even not arise -- if full pooling is applied, while it is stable under threshold pooling.