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The use of Additive Manufacturing (AM) for low demand volumes, such as spare parts, has recently attracted considerable attention from researchers and practitioners. This study defines the AM Capacity Allocation Problem (AMCAP) to design an AM supply network and choose between printing upon demand and sourcing through an alternative option for each part in a given set. A mixed-integer nonlinear program was developed to minimize the production, transportation, alternative sourcing, and lead time costs. We developed a cut generation algorithm to find optimal solutions in finite iterations by exploring the convexity of the nonlinear waiting time for AM products at each AM facility. Numerical experiments show the effectiveness of the proposed algorithm for the AMCAP. A case study was conducted to demonstrate that the optimal AM deployment can save almost 20% of costs over situations that do not use any AM. The case also shows that AM can realize its maximum benefits when it works in conjunction with an alternative option, e.g., inventory holding, and its capacity is strategically deployed. Since AM is a new technology and is rapidly evolving, this study includes a sensitivity analysis to see the effects of improved AM technology features, such as machine cost and build speed. When the build speed increases, the total cost decreases quickly, but the number of AM machines will increase first then decrease later when more parts are assigned to the AM option.

Additive manufacturing capacity allocation problem over a network