Abstract: Lateral transshipment is an effective and paradoxical way in sharing inventory process. On the one hand, the total cost of inventory system can be reduced and on the other hand, the transportation costs will be increased in transit. The time window W^k, which helps to identify different service classes for consumer groups through diversified level of service,is presented to build the three-echelon spare parts logistics network with inventory sharing and time service level limit. The distribution network model with the input of n groups of customers contains a manufacturer, a RDC and the DC parameter——the default value is m. In the queuing system model, customer's requirements are independent of each other and obey the Poisson distribution; order lead time of DC obeys Exponential distribution, so as to standardize the actual complex problems. The detailed research idea of dissertation is as following:(1) a distribution network system is established considering the constraints of service level and inventory pooling so that the total cost can be reduced compared with the traditional way, and then some of inventory parameters such as repurchase dots, order quantity and etc. are considered as the decision-making factors at the same time in the three layers of tree network distribution system model in order to optimize the complex system cost of the local and global; (2) in view of the features of the problems derived from the production and the model described in the first part,a new improve algorithm is designed, based on the idea of greedy algorithm to solve the lateral transshipments model problem and get the optimal solution of decision variables in order to provide reference to managers and increase profits and resources utilization by reducing the cost; (3) through an analysis on the sharing project of the company named China Aviation Supplies Holding Company(CASC), the data from Southwest regions (DC1), northwest regions (DC2) and northeast regions (DC3) of the company is used to construct and validate the model so that the rationality of the model and the feasibility of the algorithm can be seen in the three-stage spare parts distribution system of the paper. Research results indicate that in the tertiary distribution network, when the RDC adopt continuous review (Q, R) replenishment strategy and DC with (Q, R, H), the replenishment strategy of system make total cost lower than the continuous review inventory strategy such as One-for-One ordering strategy which is widely adopted strategies of inventory check in production. inventory sharing strategy between DC can effectively reduce the cost of the whole system and in the case study costs is cut about 30%.

Key words: lateral transshipments, service levels constraints, inventory sharing, (Q, R, H) replenishment policy