A new procedure for spare parts inventory management in ETO production: a case study

Abstract

Spare parts inventory management represents a strategic but critical process in many manufacturing companies, which have to handle a high amount of different items. This work aims at developing a simulation model to manage the inventory level of spare parts of an ETO (engineering to order) company. First, heterogeneous items have been analysed and classified into four different categories. Later, a simulation model has been developed to reproduce the inventory policy currently used to monitor and control them. Finally, a new procedure has been implemented to improve the current inventory management. Results show that the new procedure allows for reducing both the total cost and the maximum amount of space needed to stock the items. In addition, the simulation model could be used by practitioners as a practical tool to identify a proper inventory strategy according to the characteristics of the different items.